IA HSB149

Creates a new "Catastrophic Savings Account" allowing Iowa residents to open interest-bearing accounts at financial institutions beginning January 1, 2026, to pay qualified catastrophic expenses such as homeowner's insurance deductibles for flood, windstorm, or other disaster-related damage

Establishes aggregate lifetime contribution limits based on insurance status: $2,000 for those paying less than $1,000 annually in homeowner's insurance premiums; up to $15,000 or twice the annual premium (whichever is less) for those paying $1,000 or more; and up to $350,000 or the assessed home value for self-insured or uninsured homeowners

Provides two tax benefits: contributions up to the lifetime limit are deductible from Iowa individual income tax, and interest earned in the account is exempt from state income tax

Imposes a 2.5% penalty on withdrawals used for non-qualified expenses, plus the withdrawn amount must be added to taxable income; exceptions apply for withdrawals due to death, garnishment, levy, or bankruptcy

Requires account holders to file annual reports and transaction reports with the Department of Revenue, and mandates closure of the account (with tax consequences) if the homestead is sold without purchasing a new one within six months