The Shelter Act creates two new tax credits to encourage homeowners and businesses to make disaster-resistant improvements to their properties. For individuals, the bill offers a nonrefundable personal credit equal to 25 percent of qualified disaster mitigation expenses, capped at $3,750 annually per person (or $7,500 for joint filers) and $15,000 total per dwelling unit across all years. For businesses, a separate 25 percent credit is available on similar expenses, limited to $5,000 annually. Both credits phase out for higher-income taxpayers—individuals with income above $100,000 and businesses with average gross receipts above $5 million. Qualified expenses include a broad range of improvements such as roof reinforcements, flood barriers, fire-resistant materials, storm shelters, backup generators, and vegetation removal around properties. To be eligible, homeowners and businesses must be located in areas that received federal disaster assistance or declarations within the past five years or are designated resilience zones. The credits apply to taxable years beginning after December 31, 2025, and unused credits can be carried forward up to five years.
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