This bill creates a new type of tax-advantaged savings account called a READY account, designed to help homeowners save money for disaster preparedness and recovery. Individuals can contribute up to $4,500 per year to these accounts (adjusted annually for inflation starting in 2026) and deduct these contributions from their taxable income. The money in READY accounts grows tax-free and can be withdrawn without taxes or penalties if used for qualifying disaster mitigation measures like reinforcing roofs, installing impact-resistant windows, or elevating homes, as well as for uninsured disaster recovery costs. Withdrawals used for other purposes are taxable as regular income and subject to an additional 20 percent tax penalty. The bill takes effect immediately for tax years beginning after it becomes law and includes standard rules allowing account transfers during divorce and to surviving spouses, while requiring accounts to cease and distributions to be taxed when passed to other heirs.
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