Working Waterfront Disaster Mitigation Tax Credit Act
The Working Waterfront Disaster Mitigation Tax Credit Act would create a new 48F investment tax credit for hazard mitigation projects on qualifying working waterfront property. The credit would be 30% of the qualified investment in eligible property placed in service in a qualifying project in a given tax year, limited to $300,000 per taxpayer (with aggregation across related entities). The credit is partial, with inflation adjustments to the cap starting after 2026. To qualify, projects must be designed to meet current or future-building codes and use a menu of mitigation approaches (e.g., structural elevation, flood risk reduction, shoreline stabilization, floodproofing, retrofitting, and warning systems). The measure also imposes a 10-year recapture period if credit has already been claimed, limits the eligible property to tangible, depreciation-eligible assets, and requires coordination with the rehabilitation credit to avoid double counting. Administration and guidance would involve the Treasury and FEMA, and there are special rules for U.S. possessions and mirror tax systems. The provisions would apply to periods after December 31, 2025.
Key Points
- 1New credit: Section 48F adds a Working Waterfront Disaster Mitigation Project Credit equal to 30% of the qualified investment in a qualifying project.
- 2Dollar cap and inflation: The credit is capped at $300,000 per taxpayer, with aggregation for related employers; starting after 2026, the cap increases with a cost-of-living adjustment and is rounded to the nearest $10,000.
- 3Qualifying projects and property: Eligible property must be tangible, depreciable, placed in service in the year, and part of a qualifying working waterfront disaster mitigation project. A qualifying project must be designed to comply with building codes and mitigate hazards via specific measures (structural elevation, flood risk reduction, shoreline stabilization, floodproofing, retrofitting, and warning systems).
- 4Working waterfront property and eligibility: Property must be in the U.S. or a U.S. possession, used in an active trade or business, and meet a gross receipts threshold (average annual gross receipts over the prior 3 years ≤ $47 million), with aggregation rules for related trades/businesses and inflation adjustments to the threshold after 2026.
- 5Interaction with existing credits and rules: The qualified investment cannot include the portion of basis attributable to rehabilitation expenditures (to prevent double-counting with the rehabilitation credit). Rules for progress expenditures mirror pre-1990s broadcast rules, and there is a 10-year recapture period if the taxpayer has received the credit previously (except for qualified progress expenditures).
- 6Administration and effective date: Treasury, in consultation with FEMA, would issue regulations. The section also provides credit treatment for possessions (territories) and mirrors existing tax rules for cross-border/territory treatment. Applies to periods after December 31, 2025.