Exclusion of amounts received from State-based catastrophe loss mitigation programs

(a) In general Section 139 is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection: (h) State-Based catastrophe loss mitigation programs (1) In general Gross income shall not include any amount received by an individual as a qualified catastrophe loss mitigation payment under a program established or administered by a State, or a political subdivision or instrumentality thereof, for the purpose of making such payments. (2) Qualified catastrophe loss mitigation payment For purposes of this section, the term qualified catastrophe loss mitigation payment means any amount which is received by an individual to make improvements to such individual’s residence for the sole purpose of hazard mitigation with respect to such residence. (3) No increase in basis Rules similar to the rules of subsection (g)(3) shall apply in the case of this subsection.. (b) Conforming amendments (1) Section 139(d) is amended by striking and qualified and inserting, qualified catastrophe mitigation payments, and qualified. (2) Section 139(i) (as redesignated by subsection (a)) is amended by striking or qualified and inserting, qualified catastrophe mitigation payment, or qualified. (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.