Georgia law lets homeowners save tax-free for disaster repairs

RICHMOND HILL, Ga. (WTOC) - A new state law that took effect at the start of the year creates a way for Georgians to build tax-advantaged savings specifically for disaster repairs, a measure supporters say will help fill gaps left by insurance.

Mary Mann still remembers the day Tropical Storm Debby damaged the Richmond Hill house she had bought only months earlier.

Floodwaters seeped into the walls, and mold followed — leaving her and her husband, both veterans, sick and without the flood coverage that might have helped.

“All I know is I want my house back. It’s all I want,” Mann said.

“And we literally lost it within months,” she added, describing how quickly the damage changed their life.

Her neighbor, Barry Doepp, said he was hit not once but twice — first by Tropical Storm Debby and later by Hurricane Helene.

“We weren’t anticipating this,” Doepp said. “A lot of us in this neighborhood didn’t have flood insurance because, well some of us did, but then they told us it wasn’t a necessity because weren’t living in a flood zone anymore.”

When Debby flooded homes in the area, many residents found coverage either lacking or absent.

New option: catastrophe savings accounts

Under the new law, Georgia will allow residents to open catastrophe savings accounts that are exempt from state income tax. Homeowners can save up to $25,000 per year in these accounts, or up to $250,000 without insurance, and use the money to pay for repairs after a declared emergency.

Georgia State University law professor Samuel Donaldson said the accounts are intended to fill important gaps that insurance may leave behind.

“Georgia is just one of a handful of states that allows this,” Donaldson said. “It shows that in our neck of the woods we’re sensitive to the fact that homeowners probably want more coverage than they have.”

Mann and Doepp said they have not yet opened catastrophe savings accounts, but both think the accounts could have helped after last year’s storms.

“If it saves us money, then yes,” Mann said.

“Oh yeah most definitely. I wish I would have done that then, but I didn’t know. Nobody ever knows until you go through it,” Doepp added.

What this means for homeowners

The accounts are designed to be used after a declared emergency; details such as eligibility, how withdrawals are documented, and interaction with federal disaster assistance will be governed by implementing rules and guidance from state authorities. The law’s supporters say the accounts give homeowners another tool to recover faster when insurance falls short or is unavailable.

The measure went into effect at the start of the new year.