On Friday, Jan. 31, the “Disaster Mitigation and Tax Parity Act of 2025" was reintroduced in the U.S. Senate. Original cosponsors of this bipartisan legislation are Sens. Thom Tillis (R-North Carolina), Alex Padilla (D-California), Bill Cassidy (R-Louisiana) and Adam Schiff (D-California). The Big “I" applauds these senators for acting while many parts of the country are recovering from unprecedented floods and wildfires.

Natural disasters have caused billions of dollars in damage, placing a significant financial strain on homeowners, businesses and insurers. As recovery costs continue to rise, federal lawmakers recognize the urgent need to address the growing insurance market crisis.

One effective approach is to encourage disaster mitigation efforts, which help strengthen communities and reduce future losses. On average, federally funded mitigation grants can save the nation $6 in future disaster costs for every $1 spent on hazard mitigation, according to FEMA.

The Disaster Mitigation and Tax Parity Act of 2025 aims to exempt qualified catastrophe mitigation payments from being considered taxable income. While Congress has excluded grants provided through FEMA from federal income tax, they have not given the same tax treatment to state grants. This legislation would fix that inconsistency.

Qualified catastrophe mitigation payments are defined as any financial assistance received to improve a property, specifically to minimize potential damage caused by windstorms, earthquakes, floods or wildfires. Incentivizing property owners and communities to take advantage of this exemption will reduce damage and save lives.

At this time, no companion legislation has been introduced in the U.S. House of Representatives. The Big “I" will continue to monitor disaster mitigation legislation as it is introduced in Congress. 

Corey Miller is Big “I" director of federal government affairs.