A bipartisan, bicameral collection of federal lawmakers introduced the Disaster Mitigation and Tax Party Act this week, proposing that homeowners be exempt from federal taxes on rebates received for hardening their homes against natural disasters.
Such rebates are not a national given, but some states – such as those represented by the lawmakers – provide them. Improvements can include removal of fire-prone vegetation close to homes, strengthening foundations against earthquakes or installing fortified roofs to defend against hurricanes. Currently, homeowners are required to pay federal taxes on those rebates.
“Hardening one’s home against threats from natural disasters remains one of the best ways to mitigate damage from the increasing frequency of disasters like wildfires and hurricanes,” U.S. Sen. Dianne Feinstein (D-CA), one of the bill’s sponsors, said. “Many states, including California, offer homeowners rebates for making these smart home improvements. Unfortunately, these rebates are subject to federal taxes. By exempting the rebates from federal taxes, our bill will make home improvements more affordable and encourage more homeowners nationwide to harden their homes.”
As a counter precedent, proponents of the bill pointed to rebates for energy conservation improvements. Those improvements, unlike natural disaster mitigation efforts, are exempt from federal taxes. Therefore, the bill would move the two into similar categories, giving them equal footing.
“Federal taxes being taken out of a North Carolina homeowner’s rebate is the last thing they should have to think about after a natural disaster strikes and they need to be made whole again,” U.S. Sen. Thom Tillis (R-NC), another bill sponsor, said.
Tillis and Feinstein were joined in these efforts by fellow U.S. Sens. Bill Cassidy, M.D. (R-LA) and Alex Padilla (D-CA), and in the House by U.S. Reps. Doug LaMalfa (R-CA) and Mike Thompson (D-CA).