Exclusion of amounts received from grant programs

(a) In general Section 139 of the Internal Revenue Code of 1986 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 or paid for the benefit of an individual as a qualified catastrophe mitigation payment under a program established by— (A) a State or any political subdivision or public instrumentality thereof, (B) a joint powers authority, or (C) an entity created by State law to ensure the availability of an adequate market of last resort for essential property insurance or basic property insurance, over which a State agency or State department of insurance has regulatory oversight, for the purpose of making such payments. (2) Qualified catastrophe mitigation payment For purposes of this section, the term qualified catastrophe mitigation payment means any amount received under a grant under section 2 or 3 of the Wildfire Insurance Affordability Act. (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) of the Internal Revenue Code of 1986 is amended by striking and qualified and inserting, qualified catastrophe mitigation payments, and qualified. (2) Section 139(i) of such Code (as redesignated by subsection (a)) is amended by striking or qualified and inserting, qualified catastrophe mitigation payment, or qualified.