New Shelter Act Offers 25% Tax Credit for Home Disaster-Proofing, Starting 2026

The new “Shelter Act” is essentially a financial incentive program baked into the tax code, designed to encourage homeowners and businesses to disaster-proof their properties before the next storm, fire, or flood hits. Starting in 2026, it creates two new tax credits that cover 25% of the costs for specific resilience improvements, like reinforcing a roof, installing impact-resistant windows, or even elevating a home above flood levels. This is a big deal if you live in a high-risk area and have been putting off those expensive mitigation projects—the government is now offering to pick up a quarter of the tab.

The Homeowner’s Resilience Rebate: Who Gets the Credit?

For homeowners, the credit is limited: you can claim 25% of your qualified expenses, up to a maximum of $3,750 per year, with a $15,000 lifetime limit per home (SEC. 2). To qualify, your home must be in an area that has either been declared a federal disaster zone in the last five years, is adjacent to one, or has been designated a Community Disaster Resilience Zone. This geographical restriction is key: if you live somewhere that hasn’t been officially hit yet, even if you know the risk is high, you might be left out. The credit also requires that the improvements address a hazard identified in your local or state hazard mitigation plan, and that the installation complies with the two most recent editions of building codes.

The Income Catch: Why the Credit Isn’t Equal for Everyone

Here’s where the fine print hits the wallet. The homeowner credit is nonrefundable, meaning it can only reduce your tax bill down to zero—you don't get the remainder back as a refund. If you’re a lower-income earner who owes $500 in taxes but spent $10,000 on a new roof (which would generate a $2,500 credit), you can only use $500 of that credit this year, though you can carry the rest forward for up to five years. More importantly, the credit starts to shrink if your Adjusted Gross Income (AGI) exceeds $100,000 as an individual, phasing out completely at $150,000 (double those numbers for joint filers). This means the middle-to-upper-income bracket, which often has the cash flow to afford the upfront costs of mitigation, gets less help, while lower-income households may struggle to afford the initial investment even with the promise of a future tax break.

Business Gets a Break, Too

Section 3 of the Act extends a similar 25% credit for businesses making resilience improvements to their places of business, also limited to properties in disaster-affected or resilience zones. The maximum credit for businesses is capped at $5,000. Like the personal credit, this one also phases out, but based on a business’s average gross receipts. If your average receipts over the prior three years exceed $5 million, your credit starts to shrink. This structure aims to primarily help smaller businesses afford things like installing standby generators or reinforcing structures against wind damage, keeping the incentive focused on those who might otherwise lack the capital for these protective measures.