READY Accounts Act

Tax Deductions for Savings: Individuals can claim a deduction for cash contributions made to a READY account, which is currently capped at $4,500 (Section 224(a) and 224(b)(1)).

Disaster Mitigation Support: The bill allows for funds to be used for specific home improvements to mitigate damage, such as installing impact-sistant windows or strengthening roof-to-wall connections (Section 224(c)(2)(B)).

Disaster Recovery Support: Funds can be used to pay for repairing damage to a taxpayer's principal residence resulting from fire, storm, or other casualties, provided the costs are not covered by insurance (Section 224(c)(2)(C)).

Tax-Free Distributions for Qualified Expenses: Money taken out of the account to pay for qualified home disaster mitigation or recovery expenses is not included in the beneficiary's gross income (Section 224(e)(1)).

Inflation Protection: The $4,500 deduction limit is adjusted annually based on cost-of-living adjustments to account for inflation (Section 224(b)(2)(A)).

Tax Penalties for Non-Qualified Use: If money is distributed from the account for purposes other than qualified home disaster mitigation or recovery expenses, it must be included in the beneficiary's gross income and is subject to an additional 20 percent tax (Section 224(e)(2) and 224(e)(4)).

Contribution Limits: There is a cap on the amount an individual can deduct, which limits the total amount of tax-advantaged savings available for these purposes (Section 224(b)(1)).

Taxation Upon Account Termination or Death: If an account is terminated or if a person inherits the account (and they are not a spouse), the assets may be included in their gross income (Section 224(d)(2) and 224(e)(7)(B)).