Working Waterfront Disaster Mitigation Tax Credit Act
The Working Waterfront Disaster Mitigation Tax Credit Act would create a new tax credit (the working waterfront disaster mitigation project credit) to encourage hazard mitigation work on certain waterfront properties. The credit would be 30% of the qualified investment in eligible projects, with a per-taxonpayer cap of $300,000 (adjusted for inflation after 2026) and rules to treat related entities as a single taxpayer. Projects must meet specific building-code design standards and address natural-hazard risks (flooding, erosion, etc.) for "working waterfront" properties, defined as water-dependent businesses with gross receipts under a specified threshold. The credit would be included in the general investment credit (the same framework as other energy/industrial credits) and would apply to periods after December 31, 2025. The act also provides for payments to U.S. possessions and adjustments to related tax code provisions to accommodate the new credit.
Key Points
- 1Creates a new credit (Section 48F) equal to 30% of the qualified investment in a qualifying working waterfront disaster mitigation project, against the taxpayer’s liability under the general investment credit (Sec. 46).
- 2Cap and rules: maximum $300,000 credit per taxpayer per year; related taxpayers treated as a single taxpayer; annual inflation-adjusted increases after 2026; a 10-year look-back recapture rule limits eligibility if a credit was claimed in a prior year.
- 3Qualifying projects and eligibility: projects must be designed to ICC building codes (ICC 2021 code before 2032, then the latest approved ICC model code) and implement specified hazard-mitigation measures (structural elevation, flood risk reduction, shoreline stabilization, floodproofing, retrofitting, and warning systems).
- 4Working waterfront property and eligibility criteria: property located in the U.S. or possessions, used for active water-dependent business, meeting a gross receipts test (average annual gross receipts over the prior 3 years not to exceed $47 million), and subject to aggregation rules for related trades.
- 5Regulatory framework and effective date: the Secretary of the Treasury, with FEMA input, would issue regulations as needed; the credit applies to periods after December 31, 2025, with transitional rules similar to other credits; provisions also address how possessions would receive payments or estimated benefits.