HR-6763-119
Referred to the House Committee on Ways and Means.
Sponsored by Maria Salazar (R-FL)
What it does
The Shelter Act would create two new federal tax credits for spending on natural disaster mitigation. Homeowners could claim a nonrefundable credit equal to 25% of qualifying expenditures, up to $3,750 per year ($7,500 for joint filers) and a lifetime cap of $15,000 per dwelling. Small businesses could claim a separate 25% credit capped at $5,000 per year. Qualifying improvements include wind-resistant roofing, flood-proofing, fire-resistant materials, storm shelters, seismic bracing, standby generators, and similar measures. Both credits phase out at higher incomes or revenues, apply only to properties in federally declared disaster areas or adjacent zones, and cannot be claimed for costs already covered by government grants or reimbursements.
Who benefits
Homeowners in disaster-prone areas who invest in hardening their homes against wind, flood, fire, or seismic hazards. Small businesses (under ~$5M in average gross receipts) in disaster-affected zones. Contractors, construction firms, and suppliers specializing in disaster-resilient building materials and installation. Insurance companies, which may see reduced claims from better-hardened properties. State and local governments that could see reduced disaster recovery costs. Residents of FEMA-designated Community Disaster Resilience Zones. Homeowners in wildfire-prone Western states, hurricane-prone Gulf and Atlantic Coast states, and tornado-prone Midwest and Southern states.
Who is hurt
Higher-income homeowners (AGI above $150,000 for individuals, $200,000 for joint filers) who would receive a reduced or no credit. Larger businesses with average gross receipts above $10M, which are ineligible. Renters, who cannot claim the credit even if they live in disaster-prone areas, since they do not own the dwelling. Homeowners in areas that have not received a federal disaster declaration within the past five years, who are ineligible regardless of actual hazard risk. The federal Treasury would forgo tax revenue. Homeowners who receive government grants or insurance reimbursements for the same improvements cannot double-count those costs.
Supporters argue
Supporters argue that the U.S. has experienced a dramatic rise in billion-dollar disaster events — NOAA recorded 28 such events in 2023 alone — and that federal disaster relief spending far exceeds the cost of proactive mitigation. They contend that a 25% tax credit directly lowers the financial barrier for middle-income homeowners to harden their properties, reducing both personal losses and the long-term burden on federal disaster assistance programs. Supporters also argue that the credit's geographic and hazard-specific eligibility requirements ensure funds are targeted at genuinely at-risk communities rather than broadly subsidizing routine home improvements.
Opponents argue
Opponents argue that the credit is nonrefundable, meaning it provides no benefit to lower-income households whose tax liability falls below the credit amount — the very households least able to afford disaster mitigation on their own. They contend that the bill's eligibility rules, which require a prior federal disaster declaration, exclude communities facing high but not-yet-declared hazard risk, creating an arbitrary geographic lottery. Critics also argue that the credit may primarily subsidize improvements that wealthier homeowners would have made anyway, delivering a windfall with limited additional protective effect — a concern supported by research on similar energy-efficiency tax credits showing low additionality among higher-income claimants.
Constitutional context
The bill amends the Internal Revenue Code under Congress's broad taxing and spending authority (Art. I, §8, cl. 1). Because it originates in the House and modifies tax credits rather than imposing new taxes, it is consistent with the Origination Clause (Art. I, §7, cl. 1). No significant constitutional tension is present; tax credits reducing liability are well within established congressional authority.
Checks and balances
Congress creates and defines the credits; the IRS (Executive Branch) administers eligibility, documentation requirements, and any "negative lists" of inapplicable expenditures developed in consultation with FEMA; taxpayers must provide documentation and are subject to audit.
Historical precedent
The Residential Energy Efficient Property Credit (26 U.S.C. §25D) established a similar structure — a percentage-based, capped, nonrefundable personal tax credit for qualifying home improvement expenditures — and has been used as a model for targeted residential investment incentives since 2005.