HR6763-119

What This Bill Does

The Shelter Act uses the tax code to subsidize disaster-hardening work. For individuals, it creates a nonrefundable credit equal to 25 percent of qualified disaster mitigation expenditures on a qualified dwelling unit, capped at $3,750 per year, or $7,500 for joint filers, and $15,000 cumulatively per dwelling after 2025. The personal credit phases down for higher-income taxpayers, reduces basis, and applies to taxable years after 2025. For businesses, it creates a general business credit equal to 25 percent of qualified disaster mitigation expenditures, capped at $5,000 annually, with a phaseout as average gross receipts rise above $5 million and indexation after 2026. The bill also requires reporting by businesses that receive payments supporting mitigation expenditures so the IRS can verify claims.

Who Benefits and How

Homeowners in disaster-prone areas benefit because qualifying mitigation work becomes cheaper through a 25 percent personal tax credit. Joint filers and households making repeated improvements benefit from the higher annual and cumulative dwelling limits. Small businesses benefit because mitigation investments can qualify for a 25 percent business credit before gross-receipts phaseouts apply. Contractors selling flood, fire, wind, or other resilience improvements benefit from stronger customer incentives to pay for eligible projects.

Who Bears the Burden and How

Treasury and IRS tax administrators must write forms, verify eligible expenditures, apply annual and cumulative caps, enforce basis reductions, and administer income or gross-receipts phaseouts. Businesses receiving support payments must report payment and expenditure information for IRS matching. Higher-income households and larger businesses receive reduced credits because the bill phases out benefits. Federal taxpayers bear the revenue cost of credits that reduce federal receipts.

Key Provisions

• Establishes a 25 percent personal disaster-mitigation tax credit for qualified dwelling expenditures.
• Limits the personal credit to $3,750 per year, $7,500 for joint filers, and $15,000 cumulatively per dwelling.
• Requires income phaseouts, basis reductions, and post-2025 effective dates for individual claims.
• Establishes a 25 percent business disaster-mitigation credit with a $5,000 annual cap.
• Requires gross-receipts phaseouts, inflation adjustments, and IRS reporting for business-related support payments.