FIREWALL Act Offers Homeowners 50% Tax Credit for Disaster-Proofing, Capped at $25,000

The newly proposed Facilitating Increased Resilience, Environmental Weatherization And Lowered Liability (FIREWALL) Act is essentially a massive coupon for homeowners who want to disaster-proof their primary residence. Starting in 2025, this bill creates a new refundable personal income tax credit that covers 50% of the costs a homeowner spends on making their house more resilient against natural disasters like floods, wildfires, or high winds.

The Half-Price Home Upgrade

Think of this credit as a way to cut the cost of expensive safety improvements in half. The bill sets a generous lifetime cap of $25,000 per taxpayer for these expenditures, meaning you could potentially get up to $12,500 back over time. The list of "qualified expenditures" is extensive and covers almost anything you can imagine for mitigation: reinforcing the roof, elevating the home above flood levels, installing impact-resistant windows, creating defensible space against wildfires, or even installing a standby generator system. If you’ve ever looked into getting a FORTIFIED designation for your home, the costs associated with achieving that are specifically covered, too. To be eligible, your home must be in a state or territory that has had a federal natural disaster declaration for a major event (like a hurricane or flood) within the last 10 years.

Who Gets the Full Credit?

This credit is designed to be highly accessible, but it does include an income check. It’s refundable, which is key—it means if the credit is larger than the taxes you owe, you get the difference back as a refund check. However, the maximum credit amount begins to phase out for taxpayers whose adjusted gross income (AGI) exceeds $200,000, disappearing entirely for those making over $300,000. This structure aims to focus the biggest incentive on middle- and upper-middle-class families. For a couple jointly owning a home, the maximum total expenses that can be claimed for that property in a year is $25,000, which they would split based on who paid what.

The Real-World Catch: Upfront Costs and Future Taxes

While getting 50% back sounds fantastic, there are two practical details busy people need to pay attention to. First, this is a tax credit, not an upfront rebate. You must first pay the full cost of the improvements—say, $10,000 for a new resilient roof—and then claim the $5,000 credit when you file your taxes. This creates a significant barrier for lower-income homeowners or those who live paycheck to paycheck, as they need the capital to fund the improvements before they can get the government’s help. Second, the bill requires that you reduce your property’s tax basis by the amount of the credit claimed. This is a technical accounting rule, but it means that if you claim $10,000 in credits, your home’s cost basis is lowered by $10,000. When you eventually sell the house, a lower basis means your taxable capital gain will be higher, potentially leading to a larger tax bill down the road. It’s a trade-off: safety now versus a slightly higher tax payment later. The bill is clear that you cannot claim the credit for any costs that were already paid for by insurance or other government programs.