A bipartisan bill has been introduced in the US Senate to provide financial relief to low- and middle-income homeowners facing rising flood insurance premiums under the National Flood Insurance Program (NFIP).

The Flood Insurance Affordability Tax Credit Act, introduced by Sens. Cory Booker (D-NJ) and Bill Cassidy (R-LA), proposes a 33% refundable tax credit for eligible homeowners to offset premium costs.

The proposed tax credit would be available exclusively to primary residences insured through the NFIP and would not apply to married taxpayers filing separate returns, according to the bill's text.

Cassidy said the legislation addresses the growing financial strain on policyholders, describing NFIP premiums as “outlandish.”

“While we work to fix the broken system, this tax credit provides relief to current policyholders and provides a path for others to re-enroll in the program,” Cassidy said, according to a report from AM Best.

The bill also includes a directive for the Treasury secretary to establish a program allowing premium payments to be made in advance on behalf of policyholders. Booker highlighted the importance of the legislation for states like New Jersey, where homeowners face rising flood risks and insurance costs.

“This bipartisan legislation will provide much-needed relief for low- and middle-income households, particularly in New Jersey,” Booker said. “This legislation is one important step forward as we work to expand access, lower costs, and protect New Jersey families from extreme weather and flooding.”

NFIP solvency in question

Cassidy's office released a report in October highlighting the Federal Emergency Management Agency’s (FEMA) concerns over the NFIP’s solvency. FEMA, which administers the program, has been phasing out discounts and raising premiums to achieve rate adequacy.

These measures have contributed to a decline in policyholder participation as many homeowners are unable to afford the rising costs, Cassidy said.

The NFIP remains the primary source of flood insurance for many homeowners, particularly in areas where private market alternatives are limited.