A plan to let Iowans prepare for natural disasters by setting aside money in a tax-free catastrophic savings account is under review in the Iowa legislature. Representative Austin Harris, a Republican from Montour, said a dozen other states have similar laws on the books.
"This idea has kind of come out of some of the natural disasters that we've seen the last five years in Iowa, whether it's the derecho or some of the flooding we see in northwest Iowa," Harris said, "so it's an idea for Iowans to set aside money for whenever catastrophe may happen."
There would be lifetime limits on how much could be deposited in the accounts. Limits for Iowans who have insurance on their home would in the $1000-$2000 range, while Iowans without insurance could save far more, with the limit based on the assessed value of their home. However, no more than $350,000 could be held in one of these proposed catastrophic savings accounts. Withdrawals for disaster-related expenses would not be subject to the state income tax.