Homeowners Premium Tax Reduction Act of 2025
The Homeowners Premium Tax Reduction Act of 2025 would create a new above-the-line deduction for homeowners insurance premiums paid on the taxpayer’s principal residence. The deduction would be equal to the amount of qualified insurance premiums paid or incurred during the year, but not to exceed $10,000. “Qualified insurance premiums” are defined as annual homeowners insurance premiums for the principal residence, and “principal residence” is defined the same way as the primary residence used for Section 121 (the tax rule governing capital gains exclusions on home sales). The deduction would be claimed as an adjustment to gross income (i.e., an above-the-line deduction) and would apply to taxable years ending after enactment. To implement this, the bill would add a new Section 224 to the Internal Revenue Code, rename the existing Section 224 to Section 225, and update the related references. In short, eligible homeowners could reduce their taxable income by up to $10,000 for each year they pay homeowners insurance on their main home.
Key Points
- 1Creates an above-the-line deduction for homeowners insurance premiums paid for the principal residence, capped at $10,000 per year.
- 2Deduction is taken as an adjustment to gross income (not an itemized deduction) under new Sec. 224; added to the Code and treated as part of AGI for tax purposes.
- 3Qualified premiums are defined as annual homeowners insurance premiums for the principal residence; the definition of principal residence relies on the same meaning as in Section 121.
- 4Admin changes: the bill redesignates the current Sec. 224 as Sec. 225 and inserts a new Sec. 224 after Sec. 223; cross-references are updated accordingly.
- 5Effective date: the amendments apply to taxable years ending after the enactment date.