Plain English Breakdown
The source states the bill includes reporting requirements but does not list the specific goals or performance indicators.
Tax Breaks for Natural Disaster Savings Accounts
For taxable years from January 1, 2027, to December 31, 2031, this bill allows qualified taxpayers to deduct contributions and exclude interest earned in special accounts used only for natural disaster costs.
What This Bill Does
- Allows a deduction from adjusted gross income for amounts contributed by a qualified taxpayer to a catastrophe savings account during the specified years.
- Excludes interest earned inside these specific savings or money market accounts from being counted as taxable income.
- Defines a 'catastrophe savings account' as a bank or money market account established specifically to pay for qualified catastrophe expenses of the person who opened it.
- Imposes a penalty if a taxpayer uses money taken out of the account for expenses that are not related to natural disasters.
Who It Names or Affects
- Qualified taxpayers who contribute to or earn interest in these accounts during taxable years beginning on or after January 1, 2027, and before January 1, 2032.
- Financial institutions that hold the savings or money market accounts defined as catastrophe savings accounts.
Terms To Know
- Catastrophe Savings Account
- A bank account created specifically to pay for costs caused by natural disasters, known in this bill as qualified catastrophe expenses.
- Qualified Taxpayer
- A person who meets the rules set in this bill to open and use a catastrophe savings account.
Limits and Unknowns
- The specific dollar amounts for deductions or penalties are not listed in the provided text.
- The exact definition of which expenses count as 'qualified catastrophe expenses' is not detailed here, only that they must be defined by the bill.
- This law applies to taxable years beginning on or after January 1, 2027, and before January 1, 2032.