New Bill Proposes Tax Deduction for Flood Insurance Premiums in Florida

Approximately 80% of Florida homeowners lack flood insurance coverage despite the state's widespread flood risk, presenting the largest insurance gap in the U.S. The Flood Insurance Relief Act, introduced by Congressman Byron Donalds and supported by Senators Rick Scott and Ashley Moody, targets this issue by proposing a federal tax deduction for flood insurance premiums for middle-income homeowners.

This measure aims to alleviate the financial burden of rising flood insurance costs, which averages $865 annually for Floridians, by allowing deductions for premiums paid under both the National Flood Insurance Program and private insurers. The deduction would apply to taxpayers earning less than $200,000 individually or $400,000 jointly and only for policies covering properties owned by the taxpayer. Flood insurance is mandatory for homeowners with federally backed mortgages in high-risk flood zones, yet current laws do not provide tax relief on these premiums, contributing to affordability concerns.

The legislation dovetails with broader efforts to reform flood insurance programs, promote private-market alternatives, and enhance coverage affordability amid surging premiums in coastal states. Flooding impacts all counties in Florida, making flood insurance a critical consideration for the entire state, although uptake remains limited due to cost and other factors. Proponents emphasize that such financial relief could encourage more comprehensive flood insurance adoption, thus improving disaster resilience for middle-income homeowners in flood-prone areas. Experts note that many homeowners who forgo flood insurance before disasters often face severe regret and financial exposure afterward, underscoring the importance of accessible and affordable flood coverage.