US SB1940

Creates tax-deductible READY (Residential Emergency Asset-accumulation Deferred Taxation Yield) accounts allowing individuals to contribute up to $4,500 annually for home disaster mitigation and recovery expenses, with inflation adjustments beginning in 2027

Qualified expenses include disaster mitigation measures such as roof reinforcement, impact-resistant windows and doors, home elevation, ground anchors, and upgrades to current building codes, all requiring certification by a qualified industry professional

Qualified disaster recovery costs cover uninsured repair expenses for damage from fire, storm, or other casualty to the taxpayer's principal residence

Distributions used for qualified expenses are tax-free, while non-qualified distributions are included in gross income and subject to an additional 20% penalty tax

Accounts function similar to Health Savings Accounts with tax-exempt trust status, rollover provisions, spousal transfer rules upon divorce or death, and 6% excise tax on excess contributions