Tax credits for disaster-proofing homes and businesses in disaster zones

What it does

The Shelter Act creates two new tax credits to incentivize homeowners and businesses to invest in disaster-mitigation improvements: a 25% personal credit (up to $3,750/year, $7,500 joint; $15,000 lifetime per home) for residential retrofits like reinforced roofs, flood barriers, and fire-resistant materials, and a 25% business credit (up to $5,000/year) for similar improvements to commercial properties. Both credits apply only to properties in federally declared disaster areas or those receiving FEMA mitigation assistance, and phase out at higher incomes ($100k+ for individuals, $5M+ for businesses).

Why we flagged it

The bill's core mechanism is a straightforward tax credit designed to reduce the after-tax cost of disaster-mitigation property improvements. It is functionally a subsidy for resilience spending, not a regulatory change or carve-out.

What the text implies

• The credit may disproportionately benefit higher-income homeowners who have sufficient tax liability to claim it and can afford upfront mitigation costs; lower-income households in disaster zones may lack the capital to invest even with a 25% credit.
• By tying eligibility to FEMA disaster declarations and mitigation assistance, the bill creates incentives for property owners to seek federal aid, potentially increasing demand on FEMA resources.
• The business credit's $5M gross-receipts threshold targets small to mid-market firms; larger corporations may find the $5,000 annual cap immaterial and thus have less incentive to participate.
• The credit does not apply to expenditures already funded by government or insurance, which may limit uptake in areas with robust public mitigation programs or high insurance coverage.
• Inflation adjustment and carryforward provisions create long-term tax expenditure that will reduce federal revenue in future years, with cumulative cost difficult to forecast.

Who it affects

Ordinary homeowners and small businesses in disaster-prone areas gain direct financial incentives to reduce property damage and loss of life from natural hazards. The credits lower the cost of resilience investments that would otherwise be borne entirely by property owners, with meaningful caps and phase-outs that target middle-income households and smaller enterprises.

Who stands to gain

• residential property owners in disaster-prone areas
• small to mid-market commercial real estate operators
• construction and retrofit contractors serving disaster-mitigation market
• building materials suppliers (roofing, flood barriers, fire-resistant products)

Named in the bill

Internal Revenue Code (IRC), Federal Emergency Management Agency (FEMA), Department of the Treasury, Insurance Institute for Business and Home Safety, International Code Council (ICC), National Storm Shelter Association, Robert T. Stafford Disaster Relief and Emergency Assistance Act, State and tribal Standard State Mitigation Plans

Where it stands

1 cosponsor: 1 Republicans.

• Dec 16, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• Dec 16, 2025 — Referred to Senate Committee on Finance · Congress.gov: “Read twice and referred to the Committee on Finance”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

1 lobbying clients named this bill on 3 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $1,100,000 in lobbying spend. A filing names 68 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 0% of bills with at least one filing.

Michael Bennet, the sponsor, reported $21,000 in PAC receipts in the 2026 cycle.

• Reinsurance Assn of America — $1,100,000 on 3 filings

Lobbying Disclosure Act filings through Jul 23, 2026. A filing shows who paid to lobby on a bill it names, not what changed.