Is Flood Insurance Tax-Deductible?

You can’t deduct flood insurance premiums on your income tax return. But you may be able to claim deductions for certain other home-related expenses.

Emily Guy Birken
Emily Guy Birken
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  • Over 12 years writing about insurance and personal finance

Emily is a Plutus Award-winning freelance writer and former educator who makes complex financial topics easy to understand. She specializes in the science behind money habits and has written for outlets like The Huffington Post, Business Insider, and The Washington Post.

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Evelyn PimplaskarEditor-in-Chief, Director of Content
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Standard homeowners insurance policies don’t cover flood damage, which is why flood insurance is so important. But flood insurance can be pricey, especially if you live in an area that the Federal Emergency Management Agency (FEMA) designates as having a high risk for flooding.

The median cost of flood insurance through the National Flood Insurance Program (NFIP) is $786 per year.[1] And homeowners in flood zones may pay even more.

If you’re looking to defray rising insurance costs, here’s what you need to know about flood- and home-related tax breaks.

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Can you claim flood insurance premiums on your income taxes?

As a homeowner, you can’t deduct flood insurance premiums from either your federal or state income taxes.

But businesses may deduct the cost of flood insurance and other types of insurance coverage on their federal income tax return. So if you run a home-based business, you may be able to deduct some of your flood insurance premiums.

The portion of your flood insurance premiums that’s tax-deductible depends on how much of your home you use for business and how much is primarily for personal use.[2]

For example, a freelance writer with a home office could only deduct the portion of flood insurance premiums (or homeowners insurance premiums) that covers their office. But a homeowner who uses their home as a rental property may be able to deduct the full cost of their flood insurance premiums.

Can you take a tax deduction for flood-related losses?

IRS rules allow you to take a casualty loss deduction for flood damage if you meet certain criteria:

  • A federally declared disaster caused the flood damage to your home. If an ordinary rainstorm causes some water damage in your basement, you won’t be able to take a casualty loss deduction for it. But if your basement floods from a hurricane, and the federal government designates the storm as a disaster, you may be eligible for a federal income tax deduction.

  • The damage to your home is more than your insurance reimbursement, or you didn’t have flood insurance at all. But if your insurance policy reimbursed you for all your flood damage losses, you can’t claim a deduction.

  • The total cost of damages, less $100, is greater than 10% of your adjusted gross income (AGI). To calculate how much you can deduct, subtract $100 from the total loss after your insurance reimbursement. Then subtract 10% of your AGI from the resulting number. If you come up with a positive number, you can deduct that amount from your taxes.

Good to Know

In most cases, if you have a mortgage and your home is in a high-risk flood zone, your lender will require you to buy flood insurance. Homeowners with federally backed loans like FHA or VA mortgages must buy flood insurance as a requirement of their mortgage agreements.

How floods affect your taxes

Deductions reduce your taxable income — the portion of your annual wages that’s subject to federal income tax. If you qualify for a casualty loss deduction, it could help reduce the amount of tax you owe.

If you’re uninsured or don’t have sufficient flood insurance coverage to reimburse your casualty losses, you may qualify for tax deductions based on the amount of your loss.[3]

Just keep in mind that any reimbursement you receive for qualifying damage to your home will reduce the amount of your deduction. And the IRS caps the amount you can deduct for a casualty loss.

How a casualty loss deduction works

Let’s say a federally declared disaster floods your home, causing $35,000 in damage. Your flood insurance company reimburses you for $15,000 of the cost.

To determine if you can take a casualty loss deduction, subtract $100 from the $20,000 in unreimbursed losses, which gives you $19,900. Next, calculate 10% of your AGI. If your AGI is $75,000, 10% is $7,500, which is less than your $19,900 in unreimbursed losses. Subtract $7,500 from $19,900 to get your maximum deduction of $12,400.

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Other tax breaks for homeowners

Not every instance of flood damage qualifies for a casualty loss tax deduction. Fortunately, several other federal and state tax deductions are available for homeowners and people with a home office. Just remember that most of these tax breaks require you to itemize your deductions on your federal income tax return.

  • illustration card https://a.storyblok.com/f/162273/150x150/aadb4752ff/house-rental-96x96-green_050-budget.svg

    Mortgage interest deduction

    You can typically deduct all the interest you paid on your mortgage up to $750,000 if your mortgage is more recent than 2017. If your mortgage predates 2017, the interest on up to $1 million in mortgage debt is tax-deductible.[4] Keep in mind you’ll have to itemize your deductions to claim the mortgage interest deduction.

  • illustration card https://a.storyblok.com/f/162273/150x150/1f77dd73f2/money-96x96-orange_042-invoice.svg

    Property tax deduction

    You can deduct up to $10,000 of state and local taxes, including property taxes, on your federal income tax return.

  • illustration card https://a.storyblok.com/f/162273/150x150/50605bc2ac/renewable-energy-96x96-yellow_025-solar-panel.svg

    Energy-efficient home improvements

    If you make an energy-efficient home improvement to your primary residence, you could receive a tax credit of up to 30% of the cost of the improvement. Caps apply, so you may not receive the full 30%.

  • illustration card https://a.storyblok.com/f/162273/x/48eec53b65/desk.svg

    Home office deduction

    If you’re self-employed and work from a home office, you can deduct some expenses associated with maintaining that office, including insurance premiums.[5]

  • illustration card https://a.storyblok.com/f/162273/150x150/c231786ab1/insurify-icons-auto-green-96x96_036-medical-report.svg

    Medical home improvements

    If you make changes to your home for medical reasons — such as installing a ramp or stair lift — any part of the expense greater than 7.5% of your AGI may be tax-deductible.

Which forms to use for homeowner tax breaks

To take advantage of these homeowner tax breaks, you’ll need to file the appropriate tax forms. Depending on which deduction or credit you claim, here are the forms you’ll need:

Deduction
sort ascsort desc
IRS Form
sort ascsort desc
Casualty lossForm 4684
Mortgage interestForm 1098
Property taxesSchedule A (Form 1040)
Energy-efficient home improvementForm 5695
Business use of home (home office)Form 8829

Flood insurance and taxes FAQs

If you’re interested in using tax deductions to defray homeownership costs, the answers to the following common questions can help.

  • What is a tax deduction?

    A tax deduction reduces the amount of income that you must pay tax on. By reducing your taxable income, a deduction lowers the amount you owe in taxes. Not every home-related expense is tax-deductible.

  • When can you write off flood-related casualty losses?

    If you qualify for a deduction, you can take one for flood-related casualty losses and other disaster losses during the tax year the flood occurred.

  • Why are businesses allowed to write off flood insurance, but not homeowners?

    The tax code treats flood insurance as a personal expense for homeowners. Businesses can deduct the premiums for not only flood insurance but also fire and theft insurance. Landlords can deduct flood insurance for residential rental properties because they’re considered business owners and an insured residence isn’t for personal use.

    If you run a home business or have a home office, you may be able to deduct certain expenses related to your home-based business.

  • Can you claim your homeowners insurance deductible on your taxes?

    No. Just like flood insurance, the tax code treats your homeowners insurance as a personal expense, which means you can’t deduct homeowners insurance costs.

  • What insurance can you deduct from taxes?

    Only self-employed homeowners who use a portion of their personal residence for business purposes may deduct homeowners insurance or flood insurance costs. How much you can deduct depends on how much of your home you use for business and how much is primarily personal use.

Sources

  1. Federal Emergency Management Agency (FEMA). "Cost of Flood Insurance for Single-Family Homes under NFIP’s Pricing Approach."
  2. IRS. "Publication 587 (2024), Business Use of Your Home."
  3. IRS. "Topic no. 515, Casualty, disaster, and theft losses."
  4. IRS. "Publication 936 (2024), Home Mortgage Interest Deduction."
  5. IRS. "Topic no. 509, Business use of home."
Emily Guy Birken
Emily Guy Birken

Emily Guy Birken is a former educator, lifelong money nerd, and a Plutus Award-winning freelance writer who specializes in the scientific research behind irrational money behaviors. Her background in education allows her to make complex financial topics relatable and easily understood by the layperson.

Her work has appeared on The Huffington Post, Business Insider, Kiplinger's, MSN Money, and The Washington Post online.

She is the author of several books, including The 5 Years Before You Retire, End Financial Stress Now, and the brand new book Stacked: Your Super Serious Guide to Modern Money Management, written with Joe Saul-Sehy.

Emily lives in Milwaukee with her family.

Emily has been a contributor at Insurify since October 2022.

Evelyn Pimplaskar
Edited byEvelyn PimplaskarEditor-in-Chief, Director of Content
Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

Featured in

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