U.S. Senate reintroduces bipartisan disaster mitigation bill to support homeowners

Key Takeaways

On January 30, a bipartisan group of senators reintroduced the Disaster Mitigation and Tax Parity Act of 2025 (S. 336), a bill aimed at eliminating federal taxation of state-provided residential mitigation grants. NACo previously supported this legislation and continues to advocate for its passage to support county resilience efforts.

About the Disaster Mitigation and Tax Parity Act of 2025

The Disaster Mitigation and Tax Parity Act of 2025 ensures that qualified catastrophe mitigation payments—funds provided under state-based programs to strengthen homes against disasters like windstorms, earthquakes, floods and wildfires—are excluded from federal taxable income. Currently, while similar federal grants are exempt from taxation, state-funded mitigation grants remain subject to federal tax, creating an uneven burden on homeowners investing in disaster preparedness.

Read the Legislation

Impact on Counties

Counties are on the front lines of disaster preparedness and response, and state-funded mitigation grants help residents safeguard their homes before disasters strike. However, the federal taxation of these grants reduces their effectiveness by imposing additional costs on homeowners. By eliminating this tax burden, the Disaster Mitigation and Tax Parity Act of 2025 would:

• Increase participation in state-based mitigation programs, leading to stronger, more resilient communities.
• Reduce long-term recovery costs for residents by promoting proactive disaster resilience.
• Align federal tax policy across mitigation funding sources, ensuring fair treatment for homeowners receiving state-supported assistance.

NACo strongly supports this legislation and urges Congress to advance it swiftly. Ensuring fair tax treatment for disaster mitigation grants will help counties and residents alike in preparing for and mitigating the impact of future disasters.