H.R. 6763

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6763 Introduced in House (IH)]

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119th CONGRESS
1st Session
H. R. 6763

To amend the Internal Revenue Code of 1986 to provide a credit against 
tax for disaster mitigation expenditures.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

December 16, 2025

Ms. Salazar (for herself, Ms. Pettersen, Mr. Gimenez, and Mr. Peters) 
introduced the following bill; which was referred to the Committee on 
Ways and Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to provide a credit against 
tax for disaster mitigation expenditures.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Shelter Act''.

SEC. 2. NONREFUNDABLE PERSONAL CREDIT FOR DISASTER MITIGATION 
EXPENDITURES.

(a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986, as amended by section 70411 of 
Public Law 119-21, is amended by inserting after section 25F the 
following new section:

``SEC. 25G. DISASTER MITIGATION EXPENDITURES.

``(a) Allowance of Credit.--
``(1) In general.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to 25 percent of 
the qualified disaster mitigation expenditures made by the 
taxpayer during such taxable year.
``(2) Annual limitation.--Subject to subsection (b), the 
credit allowed to a taxpayer under paragraph (1) for any 
taxable year shall not exceed $3,750 (or, in the case of a 
joint return, $7,500).
``(3) Cumulative limitation per qualified dwelling unit.--
Subject to subsection (b), the credit allowed under paragraph 
(1) with respect to a qualified dwelling unit of the taxpayer 
for any taxable year shall not exceed the excess (if any) of 
$15,000 over the aggregate credits allowed under such paragraph 
with respect to such qualified dwelling unit for all prior 
taxable years ending after December 31, 2025.
``(b) Income Phaseout.--
``(1) In general.--The amount of the credit allowed under 
subsection (a)(1) for the taxable year shall be reduced (but 
not below zero) by an amount which bears the same ratio to the 
amount under such subsection as--
``(A) the amount (not less than zero) equal to the 
adjusted gross income of the taxpayer for such taxable 
year minus $100,000, bears to
``(B) $50,000.
``(2) Inflation adjustment.--In the case of any taxable 
year after 2026, each of the dollar amounts under paragraph (1) 
shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by substituting 
`calendar year 2025' for `calendar year 2016' in 
subparagraph (A)(ii) thereof.
``(3) Rounding.--If any reduction determined under 
paragraph (1) is not a multiple of $50, or any increase under 
paragraph (2) is not a multiple of $50, such amount shall be 
rounded to the nearest multiple of $50.
``(4) Joint return.--If a joint return is filed by the 
taxpayer for the taxable year, for purposes of determining the 
amount of any reduction under paragraph (1) for such taxable 
year, the dollar amounts under such paragraph (after 
application of paragraphs (2) and (3)) shall be doubled.
``(c) Definitions.--For purposes of this section--
``(1) Qualified disaster mitigation expenditure.--
``(A) In general.--Subject to subparagraphs (B) and 
(C), the term `qualified disaster mitigation 
expenditure' means an expenditure relating to a 
qualified dwelling unit--
``(i) for property to--
``(I) improve the strength of a 
roof deck attachment,
``(II) create a secondary water 
barrier to prevent water intrusion or 
mitigate against potential water 
intrusion from wind-driven rain,
``(III) improve the durability, 
impact resistance (not less than class 
3 or 4 rating), or fire resistance (not 
less than class A rating) of a roof 
covering,
``(IV) brace gable-end walls,
``(V) reinforce the connection 
between a roof and supporting wall,
``(VI) protect openings from 
penetration by wind-borne debris,
``(VII) protect exterior doors and 
garages from natural hazards,
``(VIII) complete measures 
contained in the publication of the 
Federal Emergency Management Agency 
entitled `Wind Retrofit Guide for 
Residential Buildings' (P-804),
``(IX) elevate the qualified 
dwelling unit, as well as utilities, 
machinery, or equipment, above the base 
flood elevation or other applicable 
minimum elevation requirement,
``(X) seal walls in the basement of 
the qualified dwelling unit using 
waterproofing compounds, or
``(XI) protect propane tanks or 
other external fuel sources,
``(ii) to install--
``(I) check valves to prevent flood 
water from backing up into drains,
``(II) flood vents, breakaway walls 
or open lattice for homes located in V 
zones,
``(III) a stormwater drainage 
system or improve an existing system,
``(IV) natural or nature-based 
features for flood control, including 
living shorelines,
``(V) roof coverings, sheathing, 
flashing, roof and attic vents, eaves, 
or gutters that conform to ignition-
resistant construction standards,
``(VI) wall components for wall 
assemblies that conform to ignition-
resistant construction standards,
``(VII) a wall-to-foundation anchor 
or connector, or a shear transfer 
anchor or connector,
``(VIII) wood structural panel 
sheathing for strengthening cripple 
walls,
``(IX) anchorage of the masonry 
chimney to the framing,
``(X) prefabricated lateral 
resisting systems,
``(XI) a standby generator system 
consisting of a standby generator and 
an automatic transfer switch,
``(XII) a storm shelter that meets 
the design and construction standards 
established by the International Code 
Council and the National Storm Shelter 
Association (ICC-500), or a safe room 
that satisfies the criteria contained 
in--
``(aa) the publication of 
the Federal Emergency 
Management Agency entitled 
`Safe Rooms for Tornadoes and 
Hurricanes' (P-361), or
``(bb) the publication of 
the Federal Emergency 
Management Agency entitled 
`Taking Shelter from the Storm' 
(P-320),
``(XIII) a lightning protection 
system,
``(XIV) exterior walls, doors, 
windows, or other exterior dwelling 
unit elements that conform to ignition-
resistant construction standards,
``(XV) exterior deck or fence 
components that conform to ignition-
resistant construction standards,
``(XVI) structure-specific water 
hydration systems, including fire 
mitigation systems such as interior and 
exterior sprinkler systems,
``(XVII) water capture and delivery 
systems to accommodate drought events 
or to decrease water use, including the 
design of such systems,
``(XVIII) flood openings for fully 
enclosed areas below the lowest floor 
of the dwelling unit,
``(XIX) lateral bracing for wall 
elements, foundation elements, and 
garage doors or other large openings to 
resist seismic loads, or
``(iii) automatic shutoff valves for water 
and gas lines, or
``(I) for services or equipment 
to--
``(aa) create buffers 
around the qualified dwelling 
unit through the removal or 
reduction of flammable 
vegetation, including vertical 
clearance of tree branches,
``(bb) create buffers 
around the dwelling unit 
through--

``(AA) the removal 
of exterior deck or 
fence components or 
ignition-prone 
landscape features, or

``(BB) replacement 
of the components or 
features described in 
item (aa) with 
components or features 
that conform to 
ignition-resistant 
construction standards,

``(cc) perform fire 
maintenance procedures 
identified by the Federal 
Emergency Management Agency or 
the United States Forest 
Service, including fuel 
management techniques such as 
creating fuel and fire breaks,
``(dd) replace flammable 
vegetation with less flammable 
species, or
``(ee) prevent smoke 
inhalation, such as air filters 
or other equipment designed to 
prevent smoke from entering the 
dwelling unit,
``(II) for property relating to 
satisfying the standards required for 
receipt of a FORTIFIED designation or a 
Wildfire Prepared designation from the 
Insurance Institute for Business and 
Home Safety, or any third-party 
verified certification demonstrating 
compliance with nationally recognized 
and consensus-based hazard mitigation 
or resilience standards, provided that 
the qualified dwelling unit receives 
such designation or certifications 
following installation of such 
property, or
``(III) for any other hazard 
mitigation activity which has been 
identified by the Secretary, in 
consultation with the Administrator of 
the Federal Emergency Management 
Agency, for mitigation of a natural 
hazard or compliance with other 
consensus-based resiliency standards.
``(B) Hazard-specific applicability.--
``(i) In general.--Subject to clause (ii), 
the term `qualified disaster mitigation 
expenditure' shall only apply to expenditures 
relating to a qualified dwelling unit which are 
described in subparagraph (A) if such 
expenditures address a hazard type identified 
in the applicable State or tribal Standard 
State Mitigation Plans or Enhanced State 
Mitigation Plans, as prepared under section 
201.4 or 201.5 of title 44, Code of Federal 
Regulations (as in effect on the date of 
enactment of this section).
``(ii) Negative lists.--The Secretary, in 
consultation with the Administrator of the 
Federal Emergency Management Agency, may 
publish a list of inapplicable expenditures 
which are region-specific in order to prohibit 
the application of subsection (a) for 
expenditures relating to hazards which are not 
relevant to the location of the qualified 
dwelling unit.
``(C) Exception.--The term `qualified disaster 
mitigation expenditure' shall not include any 
expenditure or portion thereof which is paid, funded, 
or reimbursed by a Federal, State, or local government 
entity, or any political subdivision, agency, or 
instrumentality thereof.
``(2) Qualified dwelling unit.--The term `qualified 
dwelling unit' means a dwelling unit which is located--
``(A) in the United States or in a territory of the 
United States, and
``(B) in an area--
``(i) which, during the taxable year or the 
period of the 5 taxable years preceding such 
taxable year, has received hazard mitigation 
assistance through the Federal Emergency 
Management Agency in regard to any natural 
disaster which, with respect to the expenditure 
described in paragraph (1) which is made by the 
taxpayer, is applicable to such expenditure, 
and
``(ii)(I) in which a Federal natural 
disaster declaration has been made within the 
preceding 5-year period,
``(II) which is adjacent to an area 
described in subclause (I), or
``(III) which, with respect to any taxable 
year, has been designated as a community 
disaster resilience zone (as defined in section 
206(a) of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 
5136(a))).
``(d) Limitation.--
``(1) In general.--In the case of an expenditure described 
in clause (i) or (ii) of subsection (c)(1)(A), such expenditure 
shall be taken into account in determining the qualified 
disaster mitigation expenditures made by the taxpayer during 
the taxable year only if the onsite preparation, assembly, or 
original installation of the property with respect to which 
such expenditure is made has been completed in a manner that is 
deemed to be in compliance with the latest published editions 
of relevant consensus-based codes, specifications, and 
standards or any more restrictive Federal, State, or local 
floodplain management standards and consistent with floodplain 
management regulations for the local jurisdiction in which the 
qualified dwelling unit is located.
``(2) Latest published editions.--The term `latest 
published editions' means, with respect to relevant consensus-
based codes, specifications, and standards, either of the 2 
most recently published editions.
``(e) Labor Costs.--For purposes of this section, expenditures for 
labor costs properly allocable to the onsite preparation, assembly, or 
original installation of the property described in clause (i) or (ii) 
of subsection (c)(1)(A) shall be taken into account in determining the 
qualified disaster mitigation expenditures made by the taxpayer during 
the taxable year.
``(f) Inspection Costs.--For purposes of this section, expenditures 
for the cost of any inspection required under subsection (d) which is 
properly allocable to the inspection of the preparation, assembly, or 
installation of the property described in clause (i) or (ii) of 
subsection (c)(1)(A) shall be taken into account in determining the 
qualified disaster mitigation expenditures made by the taxpayer during 
the taxable year.
``(g) Carryforward of Unused Credit.--
``(1) In general.--If the credit allowable under subsection 
(a)(1) for any taxable year exceeds the applicable tax limit 
for such taxable year, such excess shall be a carryover to each 
of the 5 succeeding taxable years and, subject to the 
limitations of paragraph (2), shall be added to the credit 
allowable by subsection (a)(1) for such succeeding taxable 
year.
``(2) Limitation.--The amount of the unused credit which 
may be taken into account under paragraph (1) for any taxable 
year shall not exceed the amount (if any) by which the 
applicable tax limit for such taxable year exceeds the sum of--
``(A) the credit allowable under subsection (a)(1) 
for such taxable year determined without regard to this 
subsection, and
``(B) the amounts which, by reason of this 
subsection, are carried to such taxable year and are 
attributable to taxable years before the unused credit 
year.
``(3) Applicable tax limit.--For purposes of this 
subsection, the term `applicable tax limit' means the 
limitation imposed by section 26(a) for the taxable year 
reduced by the sum of the credits allowable under this subpart 
(other than this section).
``(h) Documentation.--Any taxpayer claiming the credit under this 
section shall provide the Secretary with adequate documentation 
regarding the specific qualified disaster mitigation expenditures made 
by the taxpayer during the taxable year, as well as such other 
information or documentation as the Secretary may require.''.
(b) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 25F the following new 
item:

``Sec. 25G. Disaster mitigation expenditures.''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.

SEC. 3. BUSINESS-RELATED CREDIT FOR DISASTER MITIGATION.

(a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 45AA the following new section:

``SEC. 45BB. DISASTER MITIGATION CREDIT.

``(a) General Rule.--For purposes of section 38, the disaster 
mitigation credit determined under this section for any taxable year is 
an amount equal to 25 percent of the qualified disaster mitigation 
expenditures made by the taxpayer during the taxable year.
``(b) Maximum Credit.--
``(1) In general.--Subject to paragraph (2), the amount of 
the credit determined under subsection (a) for any taxable year 
shall not exceed $5,000.
``(2) Phaseout.--
``(A) In general.--The amount under paragraph (1) 
for the taxable year shall be reduced (but not below 
zero) by an amount which bears the same ratio to the 
amount under such paragraph as--
``(i) the amount (not less than zero) equal 
to the average gross receipts of the taxpayer 
over the 3 preceding taxable years minus 
$5,000,000, bears to
``(ii) $5,000,000.
``(B) Inflation adjustment.--In the case of any 
taxable year after 2026, each of the dollar amounts 
under subparagraph (A) shall be increased by an amount 
equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment 
determined under section 1(f)(3) for the 
calendar year in which the taxable year begins, 
determined by substituting `calendar year 2025' 
for `calendar year 2016' in subparagraph 
(A)(ii) thereof.
``(C) Rounding.--If any reduction determined under 
subparagraph (A) is not a multiple of $50, or any 
increase under subparagraph (B) is not a multiple of 
$50, such amount shall be rounded to the nearest 
multiple of $50.
``(c) Qualified Disaster Mitigation Expenditure.--
``(1) In general.--For purposes of this section, the term 
`qualified disaster mitigation expenditure' has the same 
meaning given such term under paragraph (1) of section 25G(c), 
except that `place of business' shall be substituted for 
`qualified dwelling unit' each place it appears in such 
paragraph.
``(2) Place of business.--For purposes of this section, an 
expenditure shall not be treated as a qualified disaster 
mitigation expenditure (as defined in paragraph (1)) unless the 
taxpayer's place of business is located--
``(A) in the United States or in a territory of the 
United States, and
``(B) in an area--
``(i) in which a Federal natural disaster 
declaration has been made within the preceding 
5-year period,
``(ii) which is adjacent to an area 
described in clause (i),
``(iii) which, during the taxable year or 
the period of the 5 taxable years preceding 
such taxable year, has received hazard 
mitigation assistance through the Federal 
Emergency Management Agency in regard to any 
natural disaster which, with respect to the 
expenditure described in section 25G(c)(1) 
which is made by the taxpayer, is applicable to 
such expenditure, or
``(iv) which, with respect to any taxable 
year, has been designated as a community 
disaster resilience zone (as defined in section 
206(a) of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 
5136(a))).
``(d) Special Rules.--Rules similar to the rules of subsections (d) 
through (g) of section 25G shall apply for purposes of this section.
``(e) No Double Benefit.--No credit shall be determined under this 
section with respect to any expenditures for which a credit was allowed 
under section 25G.''.
(b) Conforming Amendments.--
(1) Section 38(b) of such Code is amended by striking 
``plus'' at the end of paragraph (40), by striking the period 
at the end of paragraph (41) and inserting ``, plus'', and by 
adding at the end the following new paragraph:
``(42) the disaster mitigation credit determined under 
section 45BB(a).''.
(2) The table of sections for subpart D of part IV of 
subchapter A of chapter 1 of such Code is amended by inserting 
after the item relating to section 45AA the following new item:

``Sec. 45BB. Disaster mitigation credit.''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.
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