Bill Text: NY A01436 | 2025-2026 | General Assembly | Introduced

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Bill Title: Establishes catastrophe savings accounts as a tax-free account to allow homeowners to save money to cover qualified catastrophe expenses.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2025-01-09 - referred to ways and means [A01436 Detail]

Download: New_York-2025-A01436-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          1436

                               2025-2026 Regular Sessions

                   IN ASSEMBLY

                                     January 9, 2025
                                       ___________

        Introduced by M. of A. HUNTER -- read once and referred to the Committee
          on Ways and Means

        AN  ACT  to  amend  the tax law, in relation to establishing catastrophe
          savings accounts

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Article 22 of the tax law is amended by adding a new part
     2  VII to read as follows:
     3                    PART VII--CATASTROPHE SAVINGS ACCOUNTS
     4    Section 710. Definitions.
     5            711. Catastrophe savings accounts.
     6    § 710. Definitions. As used in this part, the  following  terms  shall
     7  have the following definitions:
     8    (a)  "Catastrophe  savings account" means a regular savings account or
     9  money market account established by an insurance policyholder for  resi-
    10  dential  real  property  in  this state to cover an insurance deductible
    11  under an insurance policy for  the  taxpayer's  primary  residence  that
    12  covers  hurricane,  rising  floodwaters, or other catastrophic windstorm
    13  event damage or by an individual to cover self-insured  losses  for  the
    14  taxpayer's  primary  residence  from a hurricane, rising floodwaters, or
    15  other catastrophic windstorm event.
    16    (b) "Qualified catastrophe expenses" mean expenses paid or incurred by
    17  reason of a major disaster that has been declared by the governor to  be
    18  a  state  disaster emergency pursuant to the provisions of section twen-
    19  ty-eight of the executive law.
    20    (c) "Qualified deductible" means the deductible for  the  individual's
    21  homeowner's policy for a taxpayer's primary residence.
    22    §  711.  Catastrophe  savings  accounts. (a)(1) An individual taxpayer
    23  shall be allowed a deduction from the tax imposed pursuant to this arti-
    24  cle for amounts contributed to a catastrophe savings account pursuant to
    25  paragraph three of subsection (b) of this section; and

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01892-01-5
        A. 1436                             2

     1    (2) All interest income earned by  such  catastrophe  savings  account
     2  shall be exempt from the tax imposed pursuant to this article.
     3    (b)(1)  An account must be labeled as a catastrophe savings account in
     4  order to qualify as a catastrophe savings account  as  defined  in  this
     5  article. A taxpayer shall establish only one catastrophe savings account
     6  and shall specify that the purpose of the account is to cover the amount
     7  of  insurance  deductibles and other uninsured portions of risks of loss
     8  from hurricane,  rising  floodwater,  or  other  catastrophic  windstorm
     9  event.
    10    (2)  A catastrophe savings account shall not be subject to attachment,
    11  levy, garnishment, or legal process in the state.
    12    (3) The total amount that may be contributed to a catastrophe  savings
    13  account shall not exceed:
    14    (A)  in  the  case  of an individual whose qualified deductible is not
    15  more than one thousand dollars, two thousand dollars;
    16    (B) in the case of an individual whose qualified  deductible  is  more
    17  than  one  thousand  dollars,  the amount equal to the lesser of fifteen
    18  thousand dollars or twice the amount of the taxpayer's qualified deduct-
    19  ible; or
    20    (C) in the case of a self-insured individual who chooses not to obtain
    21  insurance on their primary residence two hundred fifty thousand dollars,
    22  but in no event shall exceed the  value  of  the  individual  taxpayer's
    23  primary residence.
    24    (4)  If  a  taxpayer  contributes  in excess of the limits provided in
    25  paragraph three of this subsection, such  taxpayer  shall  withdraw  the
    26  amount  of  the  excess  contributions  and include such amount in their
    27  income for purposes of this article in the year of withdrawal.
    28    (c) A  distribution  from  a  catastrophe  savings  account  shall  be
    29  included  in  the  income  of  the  distributee unless the amount of the
    30  distribution is used to cover qualified catastrophe expenses.
    31    (d) No amount is included in income, pursuant  to  subsection  (c)  of
    32  this  section,  if the qualified catastrophe expenses of the distributee
    33  during the taxable year are equal  to  or  greater  than  the  aggregate
    34  distributions during the taxable year.
    35    (e)  If  aggregate  distributions  exceed  the  qualified  catastrophe
    36  expenses during the taxable  year,  the  amount  otherwise  included  in
    37  income shall be reduced by the amount of the distributions for qualified
    38  catastrophe expenses.
    39    (f)(1)  The  tax  imposed  pursuant  to this article attributable to a
    40  taxable distribution shall be increased by two and one-half  percent  of
    41  the amount which is includable in income.
    42    (2) Such additional tax shall not apply if:
    43    (A)  the taxpayer no longer owns a primary residence within the state;
    44  or
    45    (B) the distribution is from an account conforming  with  subparagraph
    46  (C)  of paragraph three of subsection (b) of this section and is made on
    47  or after the date on which the distributee attains the age of seventy.
    48    (g)(1)  No  amount  is  includable  in  taxable  income,  pursuant  to
    49  subsection  (c)  of this section, if the distribution is from an account
    50  conforming with subparagraph (A) or (B) of paragraph three of subsection
    51  (b) of this section and is made on  or  after  the  date  on  which  the
    52  distributee attains the age of seventy.
    53    (2)  If  a  taxpayer  receives  a  nontaxable  distribution under this
    54  subsection, such taxpayer shall not  make  further  contributions  to  a
    55  catastrophe savings account.
        A. 1436                             3

     1    (h)  In  the  event  of  death of the taxpayer that owns a catastrophe
     2  savings account, such account shall be included in income of the  person
     3  who  receives the account, unless such person is the surviving spouse of
     4  the taxpayer. Upon the death of such surviving spouse, the account shall
     5  be  included  in  the income of the person who receives the account. The
     6  additional tax in subsection (f) of this section shall not apply in  the
     7  event of a distribution on death.
     8    §  2. This act shall take effect on the first of January next succeed-
     9  ing the date on which it shall have become a law.