Shelter Act
- Bill Number
- H.R. 6763
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-12-16: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-04-29T16:11:21Z
AI-Generated Summary
Purpose of the Legislation
The "Shelter Act" (H.R. 6763) aims to encourage individuals and businesses to invest in measures that protect homes and workplaces from natural disasters, such as hurricanes, floods, wildfires, earthquakes, and tornadoes. It does this by providing tax credits to offset the costs of these improvements, promoting safer communities and potentially reducing future disaster recovery expenses.
Key Provisions
- Individual Tax Credit (Section 25G):
- Offers a nonrefundable credit equal to 25% of "qualified disaster mitigation expenditures" (costs for specific safety upgrades) made during the tax year.
- Annual limit: $3,750 for single filers or $7,500 for joint returns.
- Lifetime limit per home: $15,000 total credit across all years after 2025.
- Phaseout for higher earners: Credit reduces if adjusted gross income (AGI, a measure of total income minus certain deductions) exceeds $100,000 ($200,000 for joint returns), fully phasing out at $150,000 ($300,000 joint). Amounts adjust for inflation after 2026.
- Carryforward: Unused credit can be applied to the next 5 tax years if it exceeds tax liability (the total tax owed).
- Business Tax Credit (Section 45BB):
- Provides a general business credit (eligible for additional rules under Section 38 of the tax code) equal to 25% of qualified expenditures for business properties.
- Annual limit: $5,000, phasing out for businesses with average gross receipts over $5 million in the prior 3 years (adjusted for inflation after 2026).
- No double-dipping: Businesses cannot claim this if the individual credit was already used for the same expenses.
- Qualified Expenditures:
- Cover improvements to homes ("qualified dwelling units") or business places in disaster-prone areas, including:
- Strengthening roofs, walls, and foundations against wind, flood, fire, or earthquakes (e.g., impact-resistant windows, flood vents, fire-resistant materials).
- Installing protective features like storm shelters, automatic shutoff valves, lightning systems, or standby generators.
- Creating buffers against fire or flood, such as removing flammable vegetation or adding waterproofing.
- Achieving certifications like FORTIFIED (for wind/hail resistance) or Wildfire Prepared from the Insurance Institute for Business & Home Safety.
- Must comply with current building codes and standards; labor and inspection costs qualify.
- Excludes costs reimbursed by government programs.
- Limited to properties in U.S. states/territories that have experienced federal disaster declarations, received FEMA aid, or are in adjacent/resilience zones within the last 5 years. The Treasury Secretary (with FEMA input) can restrict irrelevant expenditures by region.
- Effective Date: Applies to tax years starting after December 31, 2025.
- Documentation: Taxpayers must provide proof of expenditures to the IRS.
Significant Changes to Existing Law
- Adds new tax code sections (25G for individuals and 45BB for businesses) to the Internal Revenue Code of 1986, creating these credits from scratch—no prior federal tax incentives specifically targeted these broad disaster mitigation activities.
- Integrates with existing tax rules, such as inflation adjustments (tied to cost-of-living changes) and business credit frameworks, but introduces unique limits, definitions, and FEMA-linked eligibility tied to state mitigation plans.
- Prevents overlap with other credits and excludes government-funded work, ensuring it supplements rather than duplicates aid programs.
Potential Impacts
- On Citizens: Homeowners and small business owners in disaster-vulnerable areas (e.g., coastal, wildfire-prone, or seismic zones) gain financial incentives to make properties more resilient, potentially lowering insurance premiums, repair costs after disasters, and personal risk. Higher-income individuals may see reduced benefits due to phaseouts.
- On Government Agencies: The IRS will handle claims, documentation, and audits, increasing administrative workload. The Treasury and FEMA must collaborate on guidance, expenditure lists, and regional restrictions, possibly requiring new resources. Federal revenue could decrease due to tax credits (estimated as "tax expenditures"), shifting some disaster cost burden from post-event aid to prevention incentives.
- On International Relations: No direct impact, as the bill focuses on U.S. territories and domestic properties.
Main Stakeholders Affected
- Individuals and Families: Primarily homeowners in FEMA-designated disaster areas, who can claim credits for home upgrades.
- Businesses: Small to medium-sized enterprises (under $5M–$10M gross receipts) in at-risk locations, benefiting from property protections.
- Government Entities: IRS (administration and enforcement), Treasury Department (rule-making), and FEMA (consultation on hazards and standards); state, tribal, and local governments via ties to mitigation plans.
- Other Groups: Insurance providers (potential for lower claims), construction and mitigation firms (increased demand for services), and disaster-affected communities (broader resilience).
Notable Legal, Constitutional, or Political Implications
- Legal: Relies on Treasury's regulatory authority for implementation, with built-in flexibility for updates (e.g., hazard lists), but requires clear documentation to prevent fraud claims. Aligns with existing tax code structures, minimizing disputes, though eligibility tied to FEMA data could lead to challenges over "disaster area" definitions.
- Constitutional: No apparent issues; uses Congress's taxing and spending powers under Article I to incentivize private action without mandating compliance.
- Political: Bipartisan sponsorship (from both parties) suggests broad appeal for disaster preparedness amid rising climate risks. Could set precedent for tax-based resilience incentives, influencing future budgets by favoring prevention over reactive spending, but may face debate over cost to federal revenues versus long-term savings.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Salazar, Maria Elvira [R-FL-27]
Cosponsors (3)
Rep. Pettersen, Brittany [D-CO-7], Rep. Gimenez, Carlos A. [R-FL-28], Rep. Peters, Scott H. [D-CA-50]
Recent Actions
- 2025-12-16: Referred to the House Committee on Ways and Means.
- 2025-12-16: Introduced in House
- 2025-12-16: Introduced in House
Bill Versions
- Shelter Act — issued 2025-12-16 — PDF (20 pages)