Mississippi has enacted legislation creating a personal income tax exemption for amounts contributed to savings accounts used to pay an insurance policy deductible and other uninsured portions of risks of loss to a taxpayer’s residence from a hurricane, flood, windstorm or other catastrophic event. Specifically, amounts contributed to a catastrophe savings account, interest income earned on those accounts, and distributions from catastrophe savings accounts that are used to pay qualified catastrophe expenses are excluded from the taxable income of the account holder. The total amount that can be contributed for a taxpayer with a qualified insurance deductible less than or equal to $1,000 is $2,000 and for taxpayers with a deductible above $1,000 a contribution equal to the lesser of $15,000 or twice the amount of the taxpayer’s qualified insurance deductible. For self-insured individuals who choose not to obtain insurance on their legal residence the amount contributed cannot exceed the value of the residence, but the amount of contributions cannot exceed $350,000.
Distributions from a catastrophe savings account are included in gross income unless used to pay qualified catastrophe expenses. Further, a taxpayer’s personal income tax paid that is attributable to a taxable distribution will be increased by 2.5% of the amount of the distribution that is includable in the taxable gross income of the taxpayer. If a taxpayer who owns a catastrophe savings account dies, the amount of money in his or her account will be included in the taxable gross income of the person who receives the account, unless that person is the surviving spouse of the taxpayer.
H.B. 1134, Laws 2015, effective January 1, 2015
Call us anytime at 228-396-2996 for assistance with this new provision for tax savings.