Refundable personal credit for disaster mitigation expenditures

(a)

In general

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 36B the following new section:

36C.

Disaster mitigation expenditures

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 50 percent of the qualified disaster mitigation expenditures made by the taxpayer during such taxable year.(b)

Maximum credit

(1)

In general

Subject to paragraphs (2) and (3), the credit allowed under subsection (a) to any taxpayer for any taxable year shall not exceed the excess of—(A)$25,000 (or, in the case of a married individual filing a separate return, 50 percent of such amount), over(B)the amount of credit allowed to the taxpayer under this section for all preceding taxable years.(2)

Phaseout

The amount under paragraph (1) for the taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount under such paragraph as—(A)the excess (if any) of—(i)the taxpayer’s adjusted gross income for such taxable year, over(ii)$200,000, bears to(B)$100,000.(3)

Limitation in the case of joint occupancy

In the case of any dwelling unit with respect to which qualified disaster mitigation expenditures are made and which is jointly occupied and used during any calendar year as a residence by two or more individuals, the following rules shall apply:(A)

Maximum expenditures

The maximum amount of such expenditures which may be taken into account under subsection (a) by all such individuals with respect to such dwelling unit during such calendar year shall be $25,000.(B)

Allocation of expenditures

The expenditures allocated to any individual for the taxable year in which such calendar year ends shall be an amount equal to the lesser of—(i)the amount of expenditures made by such individual with respect to such dwelling during such calendar year, or(ii)the maximum amount of such expenditures set forth in subparagraph (A) multiplied by a fraction—(I)the numerator of which is the amount of such expenditures with respect to such dwelling made by such individual during such calendar year, and(II)the denominator of which is the total expenditures made by all such individuals with respect to such dwelling during such calendar year.(4)

Inflation adjustment

(A)

In general

In the case of any taxable year after 2025, the $25,000 dollar amounts under paragraphs (1)(A) and (3), the $200,000 amount under paragraph (2)(A)(ii), and the $100,000 amount under paragraph (2) (B) shall each be increased by an amount equal to—(i)such dollar amount, multiplied by(ii)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof.(B)

Rounding

If any reduction determined under subparagraph (A) is not a multiple of $50, or any increase under subparagraph (B) is not a multiple of $50, such amount shall be rounded to the nearest multiple of $50.(c)

Definitions

For purposes of this section—(1)

Qualified disaster mitigation expenditure

(A)

In general

The term qualified disaster mitigation expenditure means an expenditure relating to a qualified dwelling unit—(i)for property to—(I)improve the strength of a roof deck attachment,(II)create a secondary water barrier to prevent water intrusion or mitigate against potential water intrusion from wind-driven rain,(III)improve the durability, impact resistance (not less than class 3 or 4 rating), or fire resistance (not less than class A rating) of a roof covering,(IV)brace gable-end walls,(V)reinforce the connection between a roof and supporting wall,(VI)protect openings from penetration by wind-borne debris,(VII)protect exterior doors and garages from natural hazards,(VIII)complete measures contained in the publication of the Federal Emergency Management Agency entitled Wind Retrofit Guide for Residential Buildings (P–804),(IX)elevate the qualified dwelling unit, as well as utilities, machinery, or equipment, above the base flood elevation or other applicable minimum elevation requirement,(X)seal walls in the basement of the qualified dwelling unit using waterproofing compounds, or(XI)protect propane tanks or other external fuel sources,(ii)to install—(I)check valves to prevent flood water from backing up into drains,(II)flood vents, breakaway walls or open lattice for homes located in V zones,(III)a stormwater drainage system or improve an existing system,(IV)natural or nature-based features for flood control, including living shorelines,(V)roof coverings, sheathing, flashing, roof and attic vents, eaves, or gutters that conform to ignition-resistant construction standards,(VI)wall components for wall assemblies that conform to ignition-resistant construction standards,(VII)a wall-to-foundation anchor or connector, or a shear transfer anchor or connector,(VIII)wood structural panel sheathing for strengthening cripple walls,(IX)anchorage of the masonry chimney to the framing,(X)prefabricated lateral resisting systems,(XI)a standby generator system consisting of a standby generator and an automatic transfer switch,(XII)a storm shelter that meets the design and construction standards established by the International Code Council and the National Storm Shelter Association (ICC–500), or a safe room that satisfies the criteria contained in—(aa)the publication of the Federal Emergency Management Agency entitled Safe Rooms for Tornadoes and Hurricanes (P–361), or(bb)the publication of the Federal Emergency Management Agency entitled Taking Shelter from the Storm (P–320),(XIII)a lightning protection system,(XIV)exterior walls, doors, windows, or other exterior dwelling unit elements that conform to ignition-resistant construction standards,(XV)exterior deck or fence components that conform to ignition-resistant construction standards,(XVI)structure-specific water hydration systems, including fire mitigation systems such as interior and exterior sprinkler systems,(XVII)water capture and delivery systems to accommodate drought events or to decrease water use, including the design of such systems,(XVIII)flood openings for fully enclosed areas below the lowest floor of the dwelling unit,(XIX)lateral bracing for wall elements, foundation elements, and garage doors or other large openings to resist seismic loads, or(XX)automatic shutoff valves for water and gas lines, or(iii)for services or equipment to—(I)create buffers around the qualified dwelling unit through the removal or reduction of flammable vegetation, including vertical clearance of tree branches,(II)create buffers around the dwelling unit through—(aa)the removal of exterior deck or fence components or ignition-prone landscape features, or(bb)replacement of the components or features described in item (aa) with components or features that conform to ignition-resistant construction standards,(III)perform fire maintenance procedures identified by the Federal Emergency Management Agency or the United States Forest Service, including fuel management techniques such as creating fuel and fire breaks,(IV)gather and analyze water and weather data to better understand the local climate and drought history,(V)remove flammable vegetation within 5 feet of a structure,(VI)determine the risk of natural disasters which may occur in the area in which the qualified dwelling unit is located, or(VII)prevent smoke inhalation, such as air filters or other equipment designed to prevent smoke from entering the dwelling unit, (iv)for property relating to satisfying the standards required for receipt of a FORTIFIED designation from the Insurance Institute for Business and Home Safety, provided that the qualified dwelling unit receives such designation following installation of such property, or(v)for any other hazard mitigation activity which has been identified by the Secretary, in consultation with the Administrator of the Federal Emergency Management Agency, for mitigation of a natural hazard.(B)

Exception

The term qualified disaster mitigation expenditure shall not include any expenditure or portion thereof which is paid, funded, or reimbursed by a Federal, State, or local government entity, or any political subdivision, agency, or instrumentality thereof.(2)

Qualified dwelling unit

The term qualified dwelling unit means, with respect to any taxpayer, a dwelling unit which is—(A)located in any State or territory—(i)in which a Federal natural disaster declaration has been made within the preceding 10-year period with respect to a wildfire, hurricane, windstorm or flood,(ii)which includes an area which, during the taxable year or the period of the 10 taxable years preceding such taxable year, has received hazard mitigation assistance through the Federal Emergency Management Agency in regard to any wildfire, hurricane, windstorm or flood which, with respect to the expenditure described in paragraph (1) which is made by the taxpayer, is applicable to such expenditure, or(iii)which includes an area which, with respect to any taxable year, has been designated as a community disaster resilience zone (as defined in section 206(a) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5136(a))) as the result of a wildfire, hurricane, windstorm or flood, and(B)used as the principal residence (within the meaning of section 121) of the taxpayer.(d)

Other rules

(1)

Documentation

Any taxpayer claiming the credit under this section shall provide the Secretary with adequate documentation regarding the specific qualified disaster mitigation expenditures made by the taxpayer during the taxable year, as well as such other information or documentation as the Secretary may require.(2)

Denial of double benefit

No deduction or other credit shall be allowed for expenditures which have been taken into account under this section, and the basis of any property for which a credit is allowed under this section shall be reduced by the amount of credit allowed.

(b)

Conforming amendments

(1)Section 6211(b)(4)(A) of the Internal Revenue Code of 1986 is amended by inserting , 36C after 36B.(2)Section 1324(b)(2) of title 31, United States Code, is amended by inserting , 36C after 36B.(3)The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 36B the following new item:

Sec. 36C. Disaster mitigation expenditures.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2024.