New FIREWALL Act Proposes Up to $25,000 Tax Credit for Home Disaster-Proofing Starting in 2025

The FIREWALL Act is looking to give homeowners a financial boost for making their properties safer against natural disasters. Section 2 of the act introduces a new refundable tax credit, officially called Section 36C in the tax code, kicking in for tax years after December 31, 2024. The core idea is simple: spend money to protect your home from things like hurricanes, floods, or wildfires, and you could get some of that money back from Uncle Sam.

Fortifying Your Foundation (and Wallet)

So, how does this proposed credit actually work? It's designed as a refundable personal credit, meaning even if you don't owe any taxes, you could potentially get this money back as a refund. The bill proposes covering 50% of your 'qualified disaster mitigation expenditures,' capped at a lifetime maximum of $25,000 per household. If you've already claimed some of this credit in a previous year, that amount gets subtracted from your $25,000 cap. There's an income limit, though. If your adjusted gross income (AGI) is over $200,000, the credit starts to phase out, reducing proportionally until it disappears completely for those with AGI at $300,000 or more. These dollar figures ($25k and $200k) are slated to be adjusted for inflation after 2025, keeping pace with the cost of living.

Who's Eligible and What Qualifies?

Not every home improvement project counts. First, your home needs to be your principal residence and located in an area that's seen a federal disaster declaration (wildfire, hurricane, windstorm, flood) in the last 10 years, received FEMA hazard mitigation help, or is tagged as a 'community disaster resilience zone.' Second, the expenses themselves have to be 'qualified.' The bill lists a wide range: strengthening roofs, installing water barriers, reinforcing walls and openings, adding flood vents or drainage systems, creating fire-resistant buffers by clearing vegetation, installing standby generators, building storm shelters or safe rooms that meet specific FEMA or ICC standards, and even getting a FORTIFIED designation from the Insurance Institute for Business and Home Safety. If you get reimbursed for these costs by the government, you can't claim the credit for that amount. Keep your receipts, as documentation is required. The bill also gives the Treasury Secretary, working with FEMA, the authority to add other activities to the list down the line.

The Bottom Line: Protection vs. Practicalities

This credit could be a significant incentive for homeowners in vulnerable areas to invest in long-term safety. Making homes more resilient could mean less damage, lower repair bills, and potentially even reduced insurance premiums down the road. However, while a 50% credit sounds great, the upfront cost of major projects like reinforcing foundations or installing specialized roofing can still be substantial. Even though the credit is refundable, footing the initial bill might be tough for households on tighter budgets, potentially limiting who can realistically take advantage of it. There's also that provision allowing the Secretary and FEMA to define 'other hazard mitigation activities,' which adds a layer of uncertainty until further guidance is issued. It will be important to see how clearly these qualified activities are defined and communicated so homeowners know exactly what upgrades are eligible for this potential tax break.