Disaster Mitigation and Tax Parity Act of 2025

H.R. 1849, the Disaster Mitigation and Tax Parity Act of 2025, was introduced in the House on March 5, 2025, and referred to the Committee on Ways and Means. The bill amends Section 139 of the Internal Revenue Code to exclude from gross income any qualified catastrophe mitigation payment received from a state-based program for property improvements that reduce damage from windstorms, earthquakes, or wildfires. This is a tax exclusion measure—it does not appropriate new spending but reduces tax revenue by allowing homeowners to exclude payments from income.\n\nThe money trail flows through individual tax returns: no direct federal outlay; instead, the federal government foregoes tax revenue on these payments, effectively subsidizing mitigation. The Joint Committee on Taxation would estimate the revenue loss, but no figure is provided in the bill. State programs would distribute payments to homeowners, who then spend on eligible improvements.\n\nThe legislative path: assigned to Ways and Means, requires committee markup, floor vote, Senate companion (S336 referred to Finance Committee), and Presidential signature. With 29 cosponsors and bipartisan support (sponsor LaMalfa (R-CA), cosponsors include both parties), the bill has moderate momentum but is early stage. No amendments or markup yet.\n\nStructural winners: companies supplying mitigation products and home improvement retailers. Home Depot and Lowe's are the dominant retailers of windows, roofing, siding, and insulation. Owens Corning (roofing and insulation), Builders FirstSource (structural building materials), and Masco (paint, plumbing, and building products) would see increased demand as homeowners use tax-free payments for retrofits. The impact is contingent on state programs—states must create or participate in mitigation payment programs for the exclusion to apply.\n\nTimeline: unlikely to pass before late 2026 or 2027 given the current congressional calendar and competing priorities. Investors should monitor Ways and Means Committee action and any cost estimate from JCT.