HR4861-119

What This Bill Does

The Working Waterfront Disaster Mitigation Tax Credit Act adds a new section 48F investment credit. A taxpayer may claim 30 percent of the qualified investment in eligible tangible property that is part of a qualifying working waterfront disaster-mitigation project, but no more than $300,000 per taxpayer, with controlled-group aggregation and inflation indexing after 2026. A taxpayer generally cannot claim the credit again within 10 years for another completed project, except for qualified progress expenditures. The property must be depreciable or amortizable, newly constructed or newly used by the taxpayer, and used in a project designed to prevent or mitigate damage to working waterfront property from natural hazards. Covered mitigation includes structural elevation, stormwater management, flood diversion, shoreline stabilization, erosion and landslide controls, flood-resistant construction, hazard-warning systems, and similar measures. Working waterfront property must be in the United States or a possession, used in an active trade or business with average annual gross receipts not above $47 million, and provide navigable-water access for commercial fishing, recreational fishing, boating, boatbuilding, aquaculture, dredging, or other water-dependent activity. Treasury must issue guidance in consultation with FEMA.

Who Benefits and How

Small working waterfront businesses benefit from a 30 percent tax credit for hazard-mitigation investments. Commercial fishing operations benefit if waterfront facilities become less exposed to flood, erosion, stormwater, and shoreline hazards. Boatbuilding and aquaculture businesses benefit because eligible working waterfront property includes facilities supporting those water-dependent activities. Waterfront communities benefit if the credit helps keep docks, boatyards, seafood facilities, and other coastal infrastructure operating after natural hazards. Hazard-mitigation contractors benefit from demand for elevation, drainage, floodgate, shoreline stabilization, warning-system, and flood-resistant construction projects.

Who Bears the Burden and How

Federal taxpayers bear the revenue cost of the new section 48F credit. Treasury tax administrators must write rules for eligibility, indexing, progress expenditures, and anti-duplication limits. FEMA mitigation officials must consult on guidance defining qualifying natural-hazard mitigation practices. Large waterfront businesses above the $47 million gross-receipts threshold do not receive the targeted credit.

Key Provisions

• Creates a 30 percent working waterfront disaster-mitigation investment credit.
• Limits the credit to $300,000 per taxpayer and generally one completed project every 10 years.
• Requires qualifying projects to mitigate natural hazards through elevation, stormwater, shoreline, erosion, floodproofing, warning-system, or similar work.
• Restricts eligibility to active working waterfront businesses with average annual gross receipts not exceeding $47 million.
• Requires Treasury guidance in consultation with FEMA.