The Shelter Act creates federal tax credits to help homeowners and businesses pay for improvements that reduce damage from disasters like floods, hurricanes, wildfires, and earthquakes. Homeowners can claim a credit equal to 25% of qualified mitigation costs, capped at $3,750 per year ($7,500 for joint returns) and $15,000 lifetime per property, while businesses can claim up to $5,000 annually, with both credits phasing out at higher income levels. Eligible improvements include structural reinforcements, backup power systems, and fire-resistant landscaping, and must be made to properties in areas that have received federal disaster assistance. The credits take effect for the 2026 tax year, allow unused credits to be carried forward for up to five years, and require taxpayers to document their expenses to the IRS.
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