The Flood Insurance Tax Credit Act of 2025: Explained

Overview: Flood Insurance Tax Credit Act of 2025

The Flood Insurance Tax Credit Act of 2025 proposes a new tax credit for eligible flood insurance premiums. The credit would start for tax years after December 31, 2025.

The bill separates the credit into options for National Flood Insurance Program coverage, private flood insurance, and a smaller credit for National Flood Insurance Program contents-only coverage. It also adds income-based phaseouts, so the credit amount can be smaller as income rises above certain thresholds.

Note that bills often change on their way to becoming law, so this page will update as new details emerge. For real-time updates, subscribe to our newsletter.

What Is the Flood Insurance Tax Credit Act of 2025?

The Flood Insurance Tax Credit Act of 2025 would create a federal income tax credit tied to flood insurance premiums you pay. The credit would be available starting with tax years after December 31, 2025.

The bill treats different types of coverage in different ways:

• National Flood Insurance Program flood insurance on a principal residence
• Private flood insurance
• National Flood Insurance Program contents-only coverage

The goal is to reduce the after-tax cost of flood insurance for eligible households.

Who Qualifies For the Flood Insurance Tax Credit Act of 2025?

Eligibility depends on the type of flood insurance coverage and your income.

Principal residence requirement for National Flood Insurance Program coverage

For National Flood Insurance Program flood insurance, the bill limits the credit to your principal residence. That means the home you live in most of the time.

Income-based phaseouts

The bill proposes income thresholds where the credit begins to phase out:

• Over $100,000 for joint filers
• Over $50,000 for single filers and other filers

Once income is over the applicable threshold, the credit amount can be reduced based on the phaseout rate tied to the type of coverage you claim. Your filing status affects which threshold applies.

No double benefit with rental or business deductions

The bill would not let you claim the credit for amounts that are also deducted for rental or business use. For example, when flood insurance premiums are deducted as part of rental use or certain home office rules, those same amounts would not also qualify for the credit.

These rules are designed to focus the credit on household flood insurance costs.

How The Flood Insurance Tax Credit Act of 2025 Works

The Flood Insurance Tax Credit Act of 2025 proposes separate credit calculations depending on whether your coverage is through the National Flood Insurance Program, a private insurer, or contents-only coverage.

Credit amount for National Flood Insurance Program flood insurance

When your flood insurance is through the National Flood Insurance Program and covers your principal residence, the proposed credit is:

• Up to $1,500 per year

Credit amount for private flood insurance

When your flood insurance is a private policy, the proposed credit is:

• Fifty percent of eligible premiums, up to $3,000 per year

Credit amount for National Flood Insurance Program contents-only coverage

When you carry National Flood Insurance Program contents-only coverage, the proposed credit is:

• Up to $600 per year

Phaseout rates by coverage type

The bill uses different phaseout rates depending on which credit you claim, applied to income above the threshold:

• National Flood Insurance Program: 1.5% for joint filers, 3% for single and other filers
• Private flood insurance: 3% for joint filers, 6% for single and other filers
• Contents-only: 0.6% for joint filers, 1.2% for single and other filers

These phaseouts can reduce the credit as income rises above the threshold.

Inflation adjustments after 2026

For tax years after 2026, the bill indexes the dollar limits and income thresholds for inflation. Over time, that means the maximum credit amounts and the income levels where phaseouts begin can adjust.

If the bill becomes law, the result is a clearer, tax-time way to offset part of your flood insurance cost.

Who Sponsors the Flood Insurance Tax Credit Act of 2025?

The Flood Insurance Tax Credit Act of 2025 is introduced in the House as H.R. 5504. Sponsor and cosponsor information can change as the bill moves through Congress and as additional lawmakers sign on.

For the latest legislative updates and cosponsors, see the Bill Tracker above.