Senate Finance advances bill allowing catastrophic-savings accounts and state tax deductions for homeowners

Representative Lumsden presented House Bill 511, legislation modeled on National Council of Insurance Legislators (NCOIL) proposals that would allow individual homeowners to create designated “catastrophic savings accounts” and reduce taxable income when funds are used for qualified catastrophic expenses after a governor-declared catastrophic event.

Lumsden said the accounts operate similarly to health savings accounts: taxpayers must hold corresponding funds in an account designated for catastrophic expenses and document qualifying expenditures. The bill applies only to owners of primary-residence residential property and distinguishes coverage and deductible levels. Lumsden said the measure includes dollar‑limit mechanics, including an offset for insurance-deductible amounts (for insured homeowners a reduction of up to $2,000 if insurer deductible is $1,000 or less, and other tiers up to $25,000) and a larger potential deduction (up to $250,000) for uninsured homeowners, subject to the fair-market-value cap.

Committee members asked clarifying questions about timing—savings accounts must be established prior to an event—and about the role of the Department of Revenue in administering the program. Lumsden said the revenue department would exercise oversight as provided in statute.

The committee passed the bill by voice vote after a second from Senator Beach. Sponsors and members said the measure is modeled on other states’ legislation and is intended to encourage household preparedness for catastrophic events.

What’s next: The bill moves forward to the Rules calendar for further floor consideration; committees flagged the need to monitor administrative guidance from the Department of Revenue if the measure becomes law.