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Congress·In Committee·3 months ago

Shelter Act proposes 25% tax credit for home and small business disaster-proofing, up to $3,750 a year

Also known as: Shelter Act

Legislative Progress

✓ Filed
Review
Senate
House
President

Impacts

Mixed Impacts(2)
Housing Assistance
Neutral
Renter
Neutral
Positive Impacts(5)
Homeowner
Helps
Small Business Owner
Helps
Gig Worker
Helps
Farmer Rancher
Helps
Union Member
Helps

Key Points

  • Creates a new tax break starting in 2026: you can claim 25% of what you spend to make your home safer from disasters, up to $3,750 a year ($7,500 for couples filing together).
  • There’s a lifetime cap per home: you can’t claim more than $15,000 total for the same home over the years (starting with costs after 2025).
  • It’s aimed at places hit by disasters recently: your home or business has to be in an area with a federal disaster declaration in the last 5 years (or nearby), or a similar high-risk zone.
  • It covers a long list of upgrades like hurricane straps, impact-resistant or fire-resistant roofs, flood vents, elevating a home, wildfire defensible space work, safe rooms, standby generators, and some inspections and labor.
  • Higher-income households and bigger businesses get less: the home credit shrinks after $100,000 income and fades out by about $150,000 (double those amounts for couples); businesses start losing the credit above $5 million in average yearly sales.
TaxesHousingSmall BusinessEnvironmentClimate Change

Milestones

2 milestones2 actions
Dec 16, 2025Senate

Read twice and referred to the Committee on Finance.

Dec 16, 2025

Introduced in Senate

What Happens Next

Projected impacts based on AI analysis

During the 2027 tax filing season for 2026 returns

People start claiming the home credit (Section 25G) when filing their 2026 federal income taxes.

Your tax refund could be larger (or what you owe could be lower) after you file, if you kept receipts and meet the rules.

First tax filing after eligible work is paid for (starting with 2026 tax year)

Small businesses start claiming the business credit (Section 45BB) on their next tax filings after doing eligible upgrades.

A qualifying business may lower its federal taxes after making safety upgrades to a location in an eligible disaster-affected area.

After the law takes effect, before or during first filing season

The IRS begins requiring “adequate documentation” and may specify what paperwork to keep or submit.

You’ll likely need receipts, proof of installation, and possibly inspection/code-compliance records to successfully claim the credit.

Related News

3 articles
U.S. Senator Michael Bennet (Press Release)·3 months ago

Bennet, Cassidy, Pettersen, Salazar Reintroduce Tax Credit to Help Families and Small Businesses Prepare for Natural Disasters

Announces the Shelter Act’s reintroduction and outlines the proposed 25% disaster-mitigation tax credit, eligibility tied to recent disaster areas, and examples of qualifying upgrades.

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U.S. Senator Bill Cassidy (Press Release)·2 months ago

Cassidy Introduces Tax Credit to Help Families and Small Businesses Prepare for Natural Disasters

Describes the Shelter Act proposal, emphasizing a 25% tax credit for qualifying mitigation expenses (with stated annual cap details) aimed at disaster-prone areas and supported by multiple groups.

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International Code Council – Building Safety Journal·over 2 years ago

New "Shelter Act" helps protect homes from disaster

Trade/publication write-up describing the Shelter Act concept and examples like storm shelters and roof strengthening; useful background but predates the 2025-12-16 bill.

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Source Information

Document Type

Congressional Bill

Official Title

Shelter Act

Bill NumberS 3497
Congress119th Congress
ChamberSenate
Latest ActionRead twice and referred to the Committee on Finance.

Sponsor

Cosponsors

(1)
R: 1

Analysis generated by AI. While we strive for accuracy, this should not be considered legal or professional advice. Always verify information with official government sources.