H.R. 5504: Flood Insurance Tax Credit Act of 2025

This bill, titled the Flood Insurance Tax Credit Act of 2025, proposes changes to the Internal Revenue Code to provide a tax credit for certain flood insurance expenses. The main provisions of the bill include:

Tax Credit for Flood Insurance Expenses

The bill introduces a new tax credit that taxpayers can claim based on their flood insurance costs. The credit encompasses three categories of flood insurance expenses:

1. Federal Flood Insurance Expenses: Taxpayers can claim the lesser of their federal flood insurance costs or $1,500.
2. Private Flood Insurance Expenses: Taxpayers can claim the lesser of 50% of their private flood insurance costs or $3,000.
3. Federal Contents Coverage Flood Insurance Expenses: Taxpayers can claim the lesser of their contents coverage flood insurance costs or $600.

Income Phaseout

The ability to claim these credits is reduced based on the taxpayer's income. The phaseout works as follows:

1. Federal Flood Insurance Expenses:
   • For joint filers, the credit decreases by 1.5% for each dollar over $100,000.
   • For all other taxpayers, it decreases by 3% for each dollar over $50,000.
2. Private Flood Insurance Expenses:
   • For joint filers, the credit decreases by 3% for each dollar over $100,000.
   • For all other taxpayers, it decreases by 6% for each dollar over $50,000.
3. Federal Contents Coverage Flood Insurance Expenses:
   • For joint filers, the credit decreases by 0.6% for each dollar over $100,000.
   • For all other taxpayers, it decreases by 1.2% for each dollar over $50,000.

Requirements for Claiming Credits

The credits are specifically for taxpayers' principal residences, meaning that expenses can only qualify if they relate to insurance on the taxpayer’s main home. Additionally, taxpayers cannot claim the tax credit for expenses that were already deducted elsewhere on their tax forms.

Adjustments and Effective Date

The dollar amounts for the credits will be adjusted for inflation in subsequent years, starting from tax years beginning in 2026. The amendments made by this bill will generally take effect for taxable years starting after December 31, 2025.

Relevant Companies

None found