As wildfire risk continues to increase in California, investing in home hardening offers a proven opportunity to reduce wildfire damages. Home hardening refers to construction techniques, material choices, and maintenance practices designed to reduce the likelihood that a structure will ignite during a wildfire. As SPUR has written about, it often entails retrofitting exposed and vulnerable parts of a home, such as roofing, vents, windows, and siding, with non-combustible or fire-resistant materials. One UC Berkeley-led study from 2025 found that home hardening can reduce wildfire losses by roughly 50%, particularly when implemented at the neighborhood scale.
In the midst of an insurance crisis in California, during which average premiums have increased by 84% (45% when adjusted for inflation) and some insurers have retreated from high-fire-risk areas, state leaders and insurers are seeking opportunities to support mitigation efforts. These opportunities involve collective action: hardening a single property will reduce wildfire risk, but not as effectively as community-scale hardening because fire spreads from structure to structure and through shared vegetation, wind-blown embers, and high heat. Thus, insurers are most willing to insure homes or advance discounts when home hardening covers an entire neighborhood. For example, insurers, including Mercury, have begun re-entering communities such as Inverness, California, where government and community leadership have led to strategic retrofitting.
Effective risk reduction matters for improving insurance affordability and availability: when an insurer re-enters a hardened community, restored competition can be the difference between a homeowner keeping a market-rate premium or being pushed onto the FAIR Plan (California’s insurer of last resort).
While home hardening can help make housing more resilient, healthy, and affordable in the long term, the cost of retrofits remains a significant barrier. According to Headwaters Economics, wildfire retrofits can cost anywhere from $2,000 to more than $100,000, pushing them beyond the reach of many households. In the last three years, California lawmakers have introduced 16 bills to support home hardening through various financing programs, including tax credits, grants, loans, insurance incentives, and property tax exemptions.
Home Hardening Financing Mechanisms Proposed in California State Bills, 2023–2026
Mechanism | Purpose | Bills | Progress |
Tax credits/ exemptions | Offset retrofit costs through the tax code |
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Insurance incentives | Reward mitigation through underwriting or discounts |
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Grant programs | Direct public funding |
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Loans/ financing plans | Spread retrofit costs over time, leverage and cycle private capital |
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Source: California Legislative Information
Note: SPUR’s California Home Hardening Financing Laws Database covers these laws in greater detail.
Tax Credits/Exemptions
Tax credits have been among the legislature’s most frequently proposed financing tools for home hardening. Bills including the Personal Income Tax: tax credits: fire-resistant home improvements (AB 582/AB 389) and the Fire Safe Home Tax Credits Act (SB 269/AB 952/SB 1084) would have allowed homeowners to claim state income tax credits for qualifying wildfire mitigation improvements. However, despite repeated introduction, none of these bills passed.
Unlike other financing mechanisms, tax credits usually require homeowners to pay the upfront cost of retrofits before receiving any financial benefit, making them most useful for households that can already finance the work. The Assembly Committee on Revenue and Taxation has questioned whether tax credits incentivize home hardening or reward work that would already be done. In addition, tax credits reduce state revenue, making them particularly difficult to advance during current state budget deficits. For example, SB 1084 would have resulted in General Fund revenue losses of approximately $50 million over three years.
Some tax credits — like the federal Clean Vehicle Tax Credit — are transferable at the point of sale, making them function more like immediate-purchase incentives. The California Legislature hasn’t proposed this model for home hardening.
In the absence of state momentum, some localities have moved forward with their own tax incentives. One example is Berkeley’s transfer tax rebate — a rebate on the tax owed when real estate changes hands — to help buyers and sellers in high-fire-risk zones cover wildfire-resilience and seismic safety upgrades. Under this rebate, a $1 million home upgraded to a Class A fire-rated roof (averaging $6,300 for a 1,000-square-foot roof) sold in Berkeley can receive a rebate of up to one-third of the city’s base transfer tax of 1.5%, or up to $5,000.
In addition to credits, AB 1971 proposed excluding qualifying home-hardening improvements from property reassessment, removing a potential disincentive for homeowners considering investments in wildfire safety. Homes are generally reassessed for property tax purposes when ownership changes or when new construction is completed. AB 1971 died in Assembly Appropriations, in part because it would have reduced the state’s general fund revenue.
Insurance Incentives
As insurers increasingly incorporate wildfire risk into underwriting decisions, lawmakers have explored whether homeowners who reduce risk should receive corresponding insurance benefits.
AB 1 (2025) is the only insurance incentive bill that passed between 2023 and 2026. It requires insurers to consider wildfire mitigation measures as part of California’s insurance regulatory framework. Notably, AB 1 was introduced by Insurance Commissioner Ricardo Lara and faced no opposition. In practice, AB 1 has had limited impact, and discounts meant to incentivize home hardening are often minimal, inconsistent across insurers, and highly variable. Where AB 1 and SB 1060 (2024) differ considerably is who the mandate falls on: AB 1 directs the Department of Insurance to periodically review and update its own list of recognized mitigation measures, leaving individual insurers discretion over how much of a discount is offered for mitigation actions. SB 1060 would have gone further by requiring insurers to factor wildfire mitigation efforts into their underwriting models, resulting in more standardized discounts, rather than merely requiring insurers to “consider” discounts. While SB 1060 passed the Senate, it lacked the necessary votes in the Assembly and was pulled by its author, Senator Becker.
Grant Programs
Grant programs provide the most direct form of financial assistance by covering a portion of retrofit costs without requiring repayment. Because home-hardening projects can cost tens of thousands of dollars, grants are often viewed as one of the most accessible financing tools, particularly for lower-income homeowners.
In 2025, AB 888, sponsored by Insurance Commissioner Ricardo Lara, established the California Safe Homes Grant Program within the Department of Insurance. The bill itself carried no appropriation: it created a Sustainable Insurance Account that only becomes spendable once the Legislature appropriates funds or the department secures federal or other outside grants. Currently, $3 million has been secured from the state budget to set up the program, but there is not enough money to fund grants. That gap between authorization and funding helps explain why implementation has been slow and grant applications have yet to open. AB 1236 and AB 970 would have established the Climate and Sustainability Insurance and Risk Reduction Grant Program, but budget concerns caused Governor Newsom to veto AB 970 in 2023, and AB 1236 died in the Assembly Committee on Insurance in 2025. In contrast to AB 888, AB 1236 would have required a one-time $10 million appropriation from the General Fund to establish the program, which would have focused more broadly on exploring insurance options and regional-scale and community-scale risk reduction activities related to wildfires, floods, and other disasters rather than more specifically on home hardening and improving insurability.
Sustained funding has proven more difficult to secure as grant proposals compete with other General Fund priorities during periods of budget constraint.
Loan Programs
Loan programs allow homeowners to spread retrofit costs over time instead of paying the full amount upfront. Compared with grants or tax credits, loans generally require less direct state spending while expanding access to financing, leveraging private capital and cycling it back through repayments to fund future borrowers.
Currently, SPUR is supporting SB 894, sponsored by MegaFire Action, which would create a statewide wildfire resilience loan program. The loans would be structured as a revolving fund, similar to the state’s GoGreen financing platform, using repayments to replenish the pool for future borrowers rather than relying on one-time grants. SB 894 passed the Senate unanimously, has advanced further than many previous financing proposals, and remains under consideration with no registered opposition.
Not advancing is SB 1041. It proposed expanding the Property Assessed Clean Energy (PACE) program to finance wildfire safety improvements in all regions through voluntary contractual assessments that allow homeowners to pay for property improvements over time through a special assessment added directly to their regular property tax bill. Opponents expressed concern that PACE financing has structural issues that can create barriers to refinancing, home sales, and access to traditional mortgage financing. Additionally, vulnerable or low-income homeowners unable to pay back PACE assessments may face property tax delinquency or foreclosure.
These outcomes illustrate both the appeal and the limitations of loan programs. While loan-based financing mechanisms can reduce the immediate cost burden for homeowners and avoid large state appropriations, they still require homeowners to assume additional debt, limiting their accessibility. In addition, PACE financing would introduce serious consequences if that debt is not repaid.
Key Takeaways
For SPUR, some key questions remain: How much should the state fund mitigation efforts, and what special considerations should be made for financing upgrades for multifamily housing, affordable housing, and mobile homes versus single-family homes? What lessons can be learned from existing financial incentive programs for building decarbonization? SPUR is reviewing the challenges and opportunities for financing home hardening and ways the Bay Area can take effective action on community-scale wildfire mitigation. SPUR plans to publish research and recommendations in early 2027.
Home hardening legislation continues to unfold alongside broader debates about California’s insurance market. In November, California voters will elect a new insurance commissioner, who is likely to shape how future legislation addresses the relationship of wildfire mitigation, insurance availability, and long-term climate planning. Voters can review SPUR’s candidate forum for insights.