New Tax Credit Offers 30% Relief, Up to $300K, for Coastal Businesses to Flood-Proof Waterfronts

The Working Waterfront Disaster Mitigation Tax Credit Act is setting up a new financial incentive to help coastal businesses—think marinas, fishing docks, and boatyards—harden their infrastructure against natural disasters like hurricanes and rising sea levels. Essentially, if you own a qualified working waterfront property and invest in a project to protect it, you can claim a tax credit equal to 30% of that investment, up to a maximum of $300,000 per year.

This isn't a small deduction; it’s a direct credit that cuts your tax bill significantly. The goal here is simple: incentivize private companies to build resilience now, reducing the massive cleanup costs and business interruptions that follow major storms. This credit applies to costs incurred after December 31, 2025, so it’s something to plan for on the business ledger.

Who Gets the Lifeline?

This credit is laser-focused on businesses that are literally tied to the water. To qualify as a “Working Waterfront Property,” your business must provide access to navigable waters for activities like commercial fishing, aquaculture, boatbuilding, or recreational boating. If you run a small-town marina, a commercial fishing pier, or a boat repair yard, you’re likely in the target zone.

There’s a clear size limit, though. The business (or the entire group if you’re part of a larger organization) must have average annual gross receipts over the last three years that don’t exceed $47 million. This is designed to ensure the credit primarily benefits medium-sized businesses and not massive conglomerates. If you’re a regional seafood processor or a large family-run shipyard, this could be a game-changer for financing necessary upgrades.

The Fine Print on Flood-Proofing

To claim the 30% credit, the investment must be part of a “Qualifying Project.” This means the work has to be designed to prevent or lessen damage from natural hazards. We’re talking about real engineering: structural elevation (raising the building off the ground), floodproofing, shoreline stabilization (to fight erosion), or retrofitting existing buildings to meet modern hazard standards.

Crucially, the project must be substantially designed to comply with the latest building standards—specifically the 2021 International Building Code for projects completed before 2033. This detail matters because it forces businesses to invest in high-quality, proven mitigation techniques, moving beyond quick fixes. If you’re a marina owner needing to elevate your main office or stabilize your docks against storm surge, this credit helps offset that major capital expense.

The Catch: Timing and Limits

While the $300,000 annual limit is generous, there’s a restriction designed to spread the benefit around. You cannot claim this credit in a tax year if you have already claimed it within the previous 10-year period. For businesses with massive, multi-phase mitigation plans, this means you need to prioritize your projects. You might use the credit for a major structural elevation project one year, but then you’ll have to wait a decade before claiming it again for, say, shoreline stabilization.

This 10-year pause is a key detail. It prevents a single entity from monopolizing the credit year after year, but it also means that businesses facing multiple, urgent mitigation needs might have to phase their protection efforts carefully, potentially leaving some assets vulnerable for longer. The Treasury Secretary, working with FEMA, will be writing the rules for how all this works, especially regarding what qualifies as “substantially designed to comply” with future building codes, which adds a layer of administrative complexity to watch out for.