READY Accounts Act
READY Accounts Act
Plain Language Summary
# READY Accounts Act Summary **What It Does:** The READY Accounts Act would create a new type of savings account specifically for homeowners to save money for disaster preparation and recovery. People could contribute up to $4,500 per year (adjusted for inflation) to these accounts and deduct these contributions from their taxes. The money could then be withdrawn tax-free to pay for home improvements that reduce damage from natural disasters—such as installing impact-resistant windows and doors, reinforcing roofs, or elevating homes—or to recover from disaster damage to their primary residence. **Who It Affects:** This bill primarily affects homeowners, particularly those living in areas prone to natural disasters like hurricanes, floods, or severe storms. It could help middle-class families afford protective upgrades that might otherwise be expensive and financially out of reach.
Insurance companies and disaster mitigation professionals who certify eligible improvements would also be involved in the process. **Current Status:** The bill is currently in committee and has not yet been voted on by Congress. It was introduced by Representative Laurel M. Lee (R-FL), a Republican from Florida, where hurricanes and natural disasters are common concerns.
CRS Official Summary
READY Accounts ActThis bill establishes a new Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) account, allows individuals to make tax-deductible contributions of up to $4,500 per year to such accounts (adjusted annually for inflation), and allows individuals to take tax-free distributions from such accounts to pay for qualified home disaster mitigation and recovery expenses related to a principal residence owned by the taxpayer.Under the bill, qualified home disaster mitigation expenses include expenses certified by a qualified industry professional as meeting criteria to mitigate damage from a natural or other disaster, includinginstalling a roofing underlayment to sheathing, impact-resistant windows, impact-resistant entry doors, or ground anchors;replacing a roof covering;applying a foam adhesive to reinforce the roof structure;strengthening the connection of the roof deck to roof framing, roof-to-wall connections, soffits, or attic ventilation openings;elevating a residence; orachieving the current building code standard.Qualified home disaster recovery expenses include costs for repairing damage to a residence resulting from fire, storm, or other casualty (provided such costs are not reimbursed).Distributions from a READY account used for anything other than qualified home disaster mitigation and recovery expenses must be included in gross income and are subject to a 20% penalty. (Some exceptions apply.)Finally, the bill imposes a 6% tax on contributions in excess of the annual limit. (Some exceptions apply.)
Latest Action
Referred to the House Committee on Ways and Means.