H.R. 1105 — Disaster Resiliency and Coverage Act of 2025

This section establishes the short title of the Act as the “Disaster Resiliency and Coverage Act of 2025.”

This section establishes the Individual Household Disaster Mitigation Program under Title II of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5131 et seq.) to provide grants to States and Indian tribal governments for qualifying pre-disaster mitigation activities on individual residential households at risk of damage from a major disaster. As background, the Stafford Act authorizes federal disaster assistance and mitigation programs administered by the Federal Emergency Management Agency (FEMA). The section directs the President to: (1) establish eligible disaster areas, in consultation with States, based on natural-hazard risk and prior major disasters; (2) provide technical assistance to States and tribal governments in developing required plans and administering household grants; (3) review and update eligible disaster areas at least every 5 years; and (4) consult with governmental and nongovernmental experts to use current scientific standards and tools in making and updating risk determinations. To receive a grant, a State or tribal government must submit a plan identifying the disaster risk areas in which it will operate, assessing the availability and affordability of homeowner insurance in those areas, analyzing factors affecting insurance availability and affordability, listing eligible mitigation activities, establishing applicant-selection criteria that consider household income and whether the residence is in a Community Disaster Resilience Zone, and setting maximum grant amounts available for each mitigation activity. The section also requires consultation with the chief insurance regulators from the 50 States, the District of Columbia, and U.S. territories, as well as insurance industry, consumer, and environmental stakeholders, to identify mitigation activities likely to increase the availability and purchase of residential property insurance and other financial risk-transfer mechanisms in eligible disaster areas. The section limits grants to eligible disaster areas that the State or tribal government determines are at high risk of a major disaster, and limits household eligibility to individuals with adjusted gross income of no more than $250,000 ($500,000 for joint returns) in the taxable year before the grant application is filed. The section directs FEMA to establish mitigation standards for each qualifying household mitigation activity, which may use a multi-tiered standard, and requires consideration of standards from the Insurance Institute for Business and Home Safety, state and territorial insurance regulators, and other appropriate standard-setting entities. It also requires States and tribal governments to publish guidance for insurers and consumers that identifies suggested incentives for participating households, including the mitigation standards, increased coverage choices, and actuarially supported favorable pricing benefits such as discounts, rebates, or premium credits.

This section excludes from gross income amounts received by an individual as a qualified catastrophe loss mitigation payment under a State-based program established or administered by a State, political subdivision, or instrumentality for hazard mitigation improvements to the individual’s residence. As background, section 139 of the Internal Revenue Code generally excludes certain disaster-related payments from income; this section adds a new category for payments used solely to make hazard-mitigation improvements to a home and applies the same no-basis-increase rule that applies to other section 139 exclusions. It also makes conforming amendments to section 139(d) and redesignates existing subsection (i) as subsection (j). The amendments apply to taxable years beginning after December 31, 2025.

This section excludes from gross income certain emergency agricultural assistance received under the Noninsured Crop Disaster Assistance Program (NAP) under 7 U.S.C. 7333, as well as assistance under the Wildfires and Hurricanes Indemnity Program Plus, the Agricultural Act of 2014 disaster assistance program, certain food assistance programs, title IV of the Agricultural Credit Act of 1978, and the Quality Loss Assistance Program. (Thus, eligible taxpayers would not include these payments in taxable income for taxable years beginning after December 31, 2025.)

This section establishes a new 30 percent individual and business income tax credit for qualifying disaster mitigation expenditures paid or incurred after enactment, in taxable years ending after enactment, with respect to real property owned or leased by the taxpayer. As background, qualifying mitigation activities are those defined in section 207(j) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act and generally include measures intended to reduce future disaster damage. The credit is reduced to the taxpayer’s actual expenditure percentage when a State pays part of the cost under a qualified State disaster mitigation program; in that case, the credit applies only to the taxpayer-paid share. The provision also treats the portion of the credit attributable to expenditures made in the ordinary course of a trade or business as part of the general business credit under section 38, while the remaining portion is treated as a personal credit. It denies a double tax benefit by reducing any related deduction or other credit by the amount of the disaster mitigation credit, and it reduces basis by the amount of the credit allowed for the expenditure. The section also makes conforming amendments to add the new credit to the general business credit list under 26 U.S.C. § 38, to update the basis adjustment rules under 26 U.S.C. § 1016, and to add section 28 to the table of sections for subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986.