HB511: HB511 Insurance; deductions from taxable income for contributions by taxpayers to catastrophe savings accounts and interest earned on such accounts; provide

Georgia law currently has no dedicated savings vehicle for homeowners to set aside money for storm and disaster related expenses. This bill creates one by adding a new Code section (O.C.G.A. § 48-7-28.5) letting a resident taxpayer open a single 'catastrophe savings account' per primary residence to pay for a homeowner's insurance deductible or for damage from a declared catastrophic event that insurance does not cover. Contribution limits depend on the size of the taxpayer's insurance deductible: up to $2,000 for those with a deductible of $1,000 or less, up to twice the deductible (capped at $25,000) for larger deductibles, and up to $250,000 (capped at the home's fair market value) for self-insured homeowners with no coverage. Contributions and interest earned are deducted from or exempt from state income tax, though withdrawals not used for qualified expenses count as taxable income, and excess contributions must be withdrawn and taxed. The law would take effect July 1, 2025, applying to tax years starting on or after January 1, 2026.

• Creates a new state income tax deduction for money a Georgia taxpayer puts into a dedicated catastrophe savings account for their primary residence.
• Exempts interest earned on catastrophe savings accounts from Georgia income tax.
• Sets contribution caps tied to the size of a homeowner's insurance deductible, ranging from $2,000 up to $25,000, or $250,000 for self-insured homeowners.
• Requires that withdrawals not spent on qualified catastrophe expenses (deductibles or uncovered storm damage repairs) be counted as taxable income.
• Requires taxpayers who over-contribute beyond the limits to withdraw the excess and pay tax on it in the year of withdrawal.
• Directs the Georgia Department of Revenue to write rules to administer the new accounts.

Georgia homeowners, especially those in areas prone to hurricanes, tornadoes, hail, or flooding, who want to save for insurance deductibles or uninsured storm damage; self-insured homeowners without coverage; and the Georgia Department of Revenue, which must administer the accounts and set rules.

Homeowners who open these accounts could reduce their state taxable income while building savings specifically earmarked for storm or disaster related costs, potentially easing the financial hit of a high insurance deductible or uncovered damage after events like hurricanes or tornadoes declared as disasters by the Governor.

• Section 1 adds O.C.G.A. § 48-7-28.5, defining 'catastrophe savings account,' 'catastrophic event,' 'qualified catastrophe expenses,' and 'qualified deductible.'
• Subsection (b) limits each taxpayer to one catastrophe savings account per primary residence, labeled specifically for that purpose.
• Subsection (c) sets tiered contribution limits: $2,000 for deductibles of $1,000 or less, twice the deductible up to $25,000 for larger deductibles, and up to $250,000 (capped at home value) for self-insured owners.
• Subsection (d) allows a deduction for contributions, exempts account interest from tax, and taxes distributions not used for qualified catastrophe expenses.
• Subsection (e) requires taxation of excess contributions upon withdrawal and addresses how account balances are taxed if the owner dies.
• Subsection (f) directs the Department of Revenue to issue rules and regulations to implement the accounts.
• Section 2 sets the effective date as July 1, 2025, applying to taxable years beginning on or after January 1, 2026.

1. 2025-05-14Effective Date 2025-07-01
2. 2025-05-14Act 269
3. 2025-05-14House Date Signed by Governor (House)
4. 2025-04-07House Sent to Governor (House)
5. 2025-03-31Senate Passed/Adopted (Senate)
6. 2025-03-31Senate Third Read (Senate)
7. 2025-03-31Senate Taken from Table (Senate)
8. 2025-03-31Senate Tabled (Senate)

• Eddie Lumsden (R, HD-012)Primary sponsor
• Shaw Blackmon (R, HD-146)
• Noel Williams (R, HD-148)
• James Burchett (R, HD-176)
• James Hatchett (R, HD-155)
• Brian Prince (D, HD-132)
• Larry Walker (R, SD-020)

1. PassedHouse voteMarch 6, 2025

   177 yea, 0 nay (1 not voting, 2 absent)

   Passage: House Vote #234

2. PassedSenate voteMarch 31, 2025

   30 yea, 20 nay (5 not voting, 1 absent)

   Motion To Engross: Hb 144, Hb 153, Hb 511: Senate Vote #340

3. PassedSenate voteMarch 31, 2025

   54 yea, 0 nay (0 not voting, 2 absent)

   Passage: Senate Vote #367

• income tax
• homeowners insurance
• disaster preparedness
• tax deductions
• savings accounts