Flood Insurance Tax Credit Act of 2025

This bill creates a new nonrefundable federal tax credit, the Flood Insurance Credit (section 25G), to help taxpayers offset certain flood insurance costs related to their principal residence. The credit applies to three categories of flood insurance expenses: (1) Federal flood insurance expenses (premiums for National Flood Insurance Program coverage, net of contents coverage), (2) private flood insurance expenses (premiums for flood insurance not provided by the NFIP, including contents coverage), and (3) Federal contents coverage flood insurance expenses (premiums for NFIP contents coverage). The credit is the sum of three “lesser-of” amounts: up to $1,500 for federal flood insurance expenses, up to 50% of private flood insurance expenses (capped at $3,000), and up to $600 for federal contents coverage flood insurance expenses. The total credit is phased out based on income, applies only to primary residences, cannot duplicate a deduction under certain other rules, and is subject to inflation adjustments after 2026. The proposal applies to taxable years beginning after December 31, 2025. In short, the bill would provide a multiple-part credit to help cover flood insurance costs for homeowners (and owners of their primary residence), with caps, income-based phaseouts, and an inflation-adjusted framework for future years.