The Flood Insurance Tax Credit Act of 2025 creates a new federal tax credit allowing homeowners to reduce their tax liability for flood insurance premiums paid on their primary residences. The credit covers three types of flood insurance expenses: federal flood insurance through the National Flood Insurance Program (up to $1,500), private flood insurance (up to $3,000, with a 50 percent match), and federal contents coverage for personal property (up to $600). The credit begins phasing out for higher-income taxpayers—starting at $50,000 in income for single filers and $100,000 for married couples filing jointly—with the reduction rates varying by insurance type. The tax credit takes effect for tax years beginning after December 31, 2025, and the dollar limits will adjust annually for inflation starting in 2027.
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