HB 511: Insurance; deductions from taxable income for contributions by taxpayers to catastrophe savings accounts and interest earned on such accounts; provide

House Bill 511 (AS PASSED HOUSE AND SENATE)

By: Representatives Lumsden of the 12th, Blackmon of the 146th, Williams of the 148th, Burchett of the 176th, Hatchett of the 155th, and others

A BILL TO BE ENTITLED

AN ACT

To amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to income tax imposition, rate, computation, exemptions, and credits, so as to provide for tax advantaged catastrophe savings accounts; to establish limits for contributions to and withdrawals from such accounts; to provide for tax treatment of contributions, interest, and withdrawals; to provide for definitions; to provide for rules and regulations; to provide for related matters; to provide for an effective date and applicability; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to income tax imposition, rate, computation, exemptions, and credits, is amended by adding a new Code section to read as follows:

"48-7-28.5.

(a) As used in this Code section, the term:

(1) 'Catastrophe savings account' means a regular savings account or money market account established by a resident taxpayer to pay for qualified catastrophe expenses.

(2) 'Catastrophic event' means windstorms, cyclones, earthquakes, hurricanes, ice storms, tornadoes, high winds, floods, hail storms, and any other weather events or occurrences, provided that such event or occurrence has been declared as a disaster or emergency by the Governor.

(3) 'Qualified catastrophe expenses' means:

(A) A qualified deductible paid for damage resulting from a catastrophic event; and

(B) Expenses incurred in repairing or replacing damage to a taxpayer's primary residence as a result of a catastrophic event that are not covered by a homeowner's insurance policy.

(4) 'Qualified deductible' means the deductible for the homeowner's insurance policy of the taxpayer covering catastrophic event damage for his or her primary residence. If such policy provides for more than one deductible, the deductible with the highest amount shall constitute the qualified deductible.

(b) A taxpayer may establish one catastrophe savings account pursuant to this Code section which shall be labeled as a catastrophe savings account and shall specify that the purpose of the account is to cover qualified catastrophe expenses. No more than one catastrophe savings account pursuant to this Code section shall be established for a primary residence.

(c)(1) For a taxpayer whose qualified deductible is $1,000.00 or less, the total amount that may be contributed to a catastrophe savings account shall not exceed $2,000.00.

(2) For a taxpayer whose qualified deductible is greater than $1,000.00, the total amount that may be contributed to a catastrophe savings account shall not exceed the lesser of twice the amount of the taxpayer's qualified deductible or $25,000.00.

(3) For a self-insured taxpayer who chooses not to obtain insurance on his or her primary residence, the total amount that may be contributed to a catastrophe savings account shall not exceed $250,000.00; provided, however, that in no case shall the amount contributed to the catastrophe savings account exceed the fair market value of the taxpayer's primary residence.

(d)(1) An individual taxpayer shall be allowed a deduction from the tax imposed pursuant to this article for amounts contributed to a catastrophe savings account in accordance with this Code section.

(2) All interest income earned by a catastrophe savings account in compliance with this Code section shall be exempt from the tax imposed pursuant this article.

(3) A distribution from a catastrophe savings account shall be included in the income of the taxpayer unless the amount of the distribution is used to cover qualified catastrophe expenses; provided, however, that no such amount shall be included in the income of the taxpayer if the qualified catastrophe expenses of the taxpayer during the taxable year are equal to or greater than the aggregate distributions from such account during the taxable year. If the aggregate distributions during the taxable year from such account exceed the qualified catastrophe expenses of the taxpayer during the taxable year, the amount otherwise included in the taxpayer's income shall be reduced by the amount of the distributions for qualified catastrophe expenses and the amount of interest income earned by the catastrophe savings account.

(e)(1) If a taxpayer contributes in excess of the limits provided in this Code section and claimed a deduction pursuant to subsection (d) of this Code section, the taxpayer shall withdraw the amount of the excess contributions and include that amount in the income of the taxpayer in the year of withdrawal.

(2) If a taxpayer who owns a catastrophe savings account dies, his or her account shall be included in the income of the person who receives the account, unless that person is the surviving spouse of the taxpayer. Upon the death of such a surviving spouse, the amount in the account shall be included in the income of the person who receives the account.

(f) The department shall promulgate any rules and regulations necessary to implement and administer the provisions of this Code section."

SECTION 2.

This Act shall become effective on July 1, 2025, and shall be applicable to taxable years beginning on or after January 1, 2026.

SECTION 3.

All laws and parts of laws in conflict with this Act are repealed.