Bill · S. 1940· Senate(119-S-1940)
READY Accounts Act
- Introduced
- 6/4/2025
- Last activity
- 6/4/2025 — Read twice and referred to the Committee on Finance.
- Sponsored by
- Rick Scott
- Cosponsors
- - 0 - 1
- Introduced
- In Committee
What this bill would do
This bill proposes to amend the Internal Revenue Code of 1986 to create Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts. These accounts are trusts intended exclusively for paying qualified home disaster mitigation and recovery expenses for a taxpayer's principal residence. Individuals can contribute cash to these accounts and receive a tax deduction of up to $4,500, which is subject to inflation adjustments after 2026. The assets within the trust are exempt from taxation, and distributions used for qualified expenses are not included in gross income. However, distributions used for purposes other than qualified expenses are subject to taxation and a 20 percent additional tax.
Who it would affect, and how
Potential Positive Impacts for People
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Tax Deductions for Home Preparation: Individuals can receive a deduction for cash contributions made to a READY account, up to a limit of $4,500 (Section 224(a) and (b)(1)).
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Tax-Free Growth and Use: The assets in the account are exempt from taxation, and money taken out to pay for qualified home disaster mitigation and recovery expenses is not included in the individual's gross income (Section 224(d)(1) and (e)(1)).
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Support for Disaster Mitigation: The bill provides a framework for funding specific home improvements to mitigate damage from disasters, such as installing impact-resistant windows, replacing roofs, or elevating a home (Section 224(c)(2)(B)).
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Support for Disaster Recovery: The accounts can be used to pay for repairing damage to a principal residence caused by fire, storm, or other casualties, provided those costs are not compensated by insurance (Section 224(c)(2)(C)).
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Protection During Life Changes: The interest in a READY account can be transferred to a spouse or former spouse during a divorce or separation without being considered a taxable transfer (Section 224(e)(6)).
Potential Negative Impacts for People
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Strict Use of Funds: If an individual uses the money for anything other than qualified home disaster mitigation and recovery expenses, the amount must be included in their gross income (Section 224(e)(2)).
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Penalties for Misuse: Individuals who distribute funds from the account for non-qualified purposes will face an additional 20 percent tax on the amount included in their gross income (Section 224(e)(4)).
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Loss of Assets Upon Death: If an account beneficiary dies and the interest is transferred to someone other than a surviving spouse, the account ceases to be a READY account and the value of the assets must be included in the recipient's or the estate's gross income (Section 224(e)(7)(B)).
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Contribution Limits: There is a cap on the amount an individual can deduct, which is set at $4,500 (Section 224(b)(1)).
- 9/15/2025
- 1 Cosponsor added.
- 6/4/2025
- Read twice and referred to the Committee on Finance.
- Introduced in Senate
One bill Congress.gov lists as related to this one — companions in the other chamber, earlier versions, and bills this one absorbed or was folded into.
Adam SchiffDemocrat · California