II 

116TH CONGRESS 

1ST SESSION S. 1958 

To amend the Internal Revenue Code of 1986 to provide a credit against 

tax for disaster mitigation expenditures. 

IN THE SENATE OF THE UNITED STATES 

JUNE 25, 2019 

Mr. BENNET (for himself and Mr. CASSIDY) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a credit against tax for disaster mitigation expenditures. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘SHELTER Act’’. 

5 SEC. 2. NONREFUNDABLE PERSONAL CREDIT FOR DIS6 ASTER MITIGATION EXPENDITURES. 

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by inserting after section 25D the fol10 lowing new section: 


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1 ‘‘SEC. 25E. DISASTER MITIGATION EXPENDITURES. 

2 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in3 dividual, there shall be allowed as a credit against the tax 

4 imposed by this chapter for the taxable year an amount 

5 equal to 25 percent of the qualified disaster mitigation ex6 penditures made by the taxpayer during such taxable year. 

7 ‘‘(b) MAXIMUM CREDIT.— 

8 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

9 the credit allowed under subsection (a) for any tax10 able year shall not exceed $5,000. 

11 ‘‘(2) PHASEOUT.— 

12 ‘‘(A) IN GENERAL.—The amount under 

13 paragraph (1) for the taxable year shall be re14 duced (but not below zero) by an amount which 

15 bears the same ratio to the amount under such 

16 paragraph as— 

17 ‘‘(i) the amount (not less than zero) 

18 equal to the adjusted gross income of the 

19 taxpayer for such taxable year minus 

20 $84,200, bears to 

21 ‘‘(ii) $40,800. 

22 ‘‘(B) JOINT RETURN.—For purposes of de23 termining the amount of any reduction under 

24 subparagraph (A) for any taxable year, if a 

25 joint return was filed for such taxable year, 


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1 each of the dollar amounts under such subpara2 graph shall be doubled. 

3 ‘‘(C) INFLATION ADJUSTMENT.—In the 

4 case of any taxable year after 2020, each of the 

5 dollar amounts under subparagraph (A) shall 

6 be increased by an amount equal to— 

7 ‘‘(i) such dollar amount, multiplied by 

8 ‘‘(ii) the cost-of-living adjustment de9 termined under section 1(f)(3) for the cal10 endar year in which the taxable year be11 gins, determined by substituting ‘calendar 

12 year 2019’ for ‘calendar year 2016’ in sub13 paragraph (A)(ii) thereof. 

14 ‘‘(D) ROUNDING.—If any reduction deter15 mined under subparagraph (A) or (B) is not a 

16 multiple of $50, or any increase under subpara17 graph (C) is not a multiple of $50, such 

18 amount shall be rounded to the nearest multiple 

19 of $50. 

20 ‘‘(c) DEFINITIONS.—For purposes of this section— 

21 ‘‘(1) QUALIFIED DISASTER MITIGATION EX22 PENDITURE.— 

23 ‘‘(A) IN GENERAL.—The term ‘qualified 

24 disaster mitigation expenditure’ means an ex25 penditure relating to a qualified dwelling unit— 


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1 ‘‘(i) for property to— 

2 ‘‘(I) improve the strength of a 

3 roof deck attachment, 

4 ‘‘(II) create a secondary water 

5 barrier to prevent water intrusion or 

6 mitigate against potential water intru7 sion from wind-driven rain, 

8 ‘‘(III) improve the durability, im9 pact resistance (not less than class 3 

10 or 4 rating), or fire resistance (not 

11 less than class A rating) of a roof cov12 ering, 

13 ‘‘(IV) brace gable-end walls, 

14 ‘‘(V) reinforce the connection be15 tween a roof and supporting wall, 

16 ‘‘(VI) protect openings from pen17 etration by wind-borne debris, 

18 ‘‘(VII) protect exterior doors and 

19 garages from natural hazards, 

20 ‘‘(VIII) complete measures con21 tained in the publication of the Fed22 eral Emergency Management Agency 

23 entitled ‘Wind Retrofit Guide for Res24 idential Buildings’ (P–804), 


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1 ‘‘(IX) elevate the qualified dwell2 ing unit, as well as utilities, machin3 ery, or equipment, above the base 

4 flood elevation or other applicable 

5 minimum elevation requirement, 

6 ‘‘(X) seal walls in the basement 

7 of the qualified dwelling unit using 

8 waterproofing compounds, or 

9 ‘‘(XI) protect propane tanks or 

10 other external fuel sources, 

11 ‘‘(ii) to install— 

12 ‘‘(I) check valves to prevent flood 

13 water from backing up into drains, 

14 ‘‘(II) flood vents, breakaway 

15 walls or open lattice for homes located 

16 in V zones, 

17 ‘‘(III) a stormwater drainage sys18 tem or improve an existing system, 

19 ‘‘(IV) natural or nature-based 

20 features for flood control, including 

21 living shorelines, 

22 ‘‘(V) roof coverings, sheathing, 

23 flashing, roof and attic vents, eaves, 

24 or gutters that conform to ignition-re25 sistant construction standards, 


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1 ‘‘(VI) wall components for wall 

2 assemblies that conform to ignition-re3 sistant construction standards, 

4 ‘‘(VII) a wall-to-foundation an5 chor or connector, or a shear transfer 

6 anchor or connector, 

7 ‘‘(VIII) wood structural panel 

8 sheathing for strengthening cripple 

9 walls, 

10 ‘‘(IX) anchorage of the masonry 

11 chimney to the framing, 

12 ‘‘(X) prefabricated lateral resist13 ing systems, 

14 ‘‘(XI) a standby generator sys15 tem consisting of a standby generator 

16 and an automatic transfer switch, 

17 ‘‘(XII) a storm shelter that meets 

18 the design and construction standards 

19 established by the International Code 

20 Council and the National Storm Shel21 ter Association (ICC–500), or a safe 

22 room that satisfies the criteria con23 tained in— 

24 ‘‘(aa) the publication of the 

25 Federal Emergency Management 


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1 Agency entitled ‘Safe Rooms for 

2 Tornadoes and Hurricanes’ (P– 

3 361), or 

4 ‘‘(bb) the publication of the 

5 Federal Emergency Management 

6 Agency entitled ‘Taking Shelter 

7 from the Storm’ (P–320), 

8 ‘‘(XIII) a lightning protection 

9 system, 

10 ‘‘(XIV) exterior walls, doors, win11 dows, or other exterior dwelling unit 

12 elements that conform to ignition-re13 sistant construction standards, 

14 ‘‘(XV) exterior deck or fence 

15 components that conform to ignition16 resistant construction standards, 

17 ‘‘(XVI) structure-specific water 

18 hydration systems, including fire miti19 gation systems such as interior and 

20 exterior sprinkler systems, 

21 ‘‘(XVII) water capture and deliv22 ery systems to accommodate drought 

23 events or to decrease water use, in24 cluding the design of such systems, 


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1 ‘‘(XVIII) flood openings for fully 

2 enclosed areas below the lowest floor 

3 of the dwelling unit, 

4 ‘‘(XIX) lateral bracing for wall 

5 elements, foundation elements, and 

6 garage doors or other large openings 

7 to resist seismic loads, or 

8 ‘‘(XX) automatic shutoff valves 

9 for water and gas lines, or 

10 ‘‘(iii) for services or equipment to— 

11 ‘‘(I) create buffers around the 

12 qualified dwelling unit through the re13 moval or reduction of flammable vege14 tation, including vertical clearance of 

15 tree branches, 

16 ‘‘(II) create buffers around the 

17 dwelling unit through— 

18 ‘‘(aa) the removal of exterior 

19 deck or fence components or igni20 tion-prone landscape features, or 

21 ‘‘(bb) replacement of the 

22 components or features described 

23 in item (aa) with components or 

24 features that conform to ignition25 resistant construction standards, 


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1 ‘‘(III) perform fire maintenance 

2 procedures identified by the Federal 

3 Emergency Management Agency or 

4 the United States Forest Service, in5 cluding fuel management techniques 

6 such as creating fuel and fire breaks, 

7 ‘‘(IV) gather and analyze water 

8 and weather data to better under9 stand the local climate and drought 

10 history, 

11 ‘‘(V) replace flammable vegeta12 tion with less flammable species, or 

13 ‘‘(VI) determine the risk of nat14 ural disasters which may occur in the 

15 area in which the qualified dwelling 

16 unit is located, or 

17 ‘‘(iv) for property relating to satis18 fying the standards required for receipt of 

19 a FORTIFIED designation from the In20 surance Institute for Business and Home 

21 Safety, provided that the qualified dwelling 

22 unit receives such designation following in23 stallation of such property. 

24 ‘‘(B) EXCEPTION.—The term ‘qualified 

25 disaster mitigation expenditure’ shall not inVerDate Sep 11 2014 02:14 Jun 28, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1958.IS S1958

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1 clude any expenditure or portion thereof which 

2 is paid, funded, or reimbursed by a Federal, 

3 State, or local government entity, or any polit4 ical subdivision, agency, or instrumentality 

5 thereof. 

6 ‘‘(2) QUALIFIED DWELLING UNIT.—The term 

7 ‘qualified dwelling unit’ means a dwelling unit which 

8 is— 

9 ‘‘(A) located— 

10 ‘‘(i) in the United States or in a terri11 tory of the United States, and 

12 ‘‘(ii) in an area— 

13 ‘‘(I) in which a Federal disaster 

14 declaration has been made within the 

15 preceding 10-year period, or 

16 ‘‘(II) which is adjacent to an 

17 area described in subclause (I), and 

18 ‘‘(B) used as a residence by the taxpayer. 

19 ‘‘(d) LIMITATION.— 

20 ‘‘(1) IN GENERAL.—In the case of an expendi21 ture described in clause (i) or (ii) of subsection 

22 (c)(1)(A), such expenditure shall be taken into ac23 count in determining the qualified disaster mitiga24 tion expenditures made by the taxpayer during the 

25 taxable year only if the onsite preparation, assembly, 


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1 or original installation of the property with respect 

2 to which such expenditure is made has been com3 pleted in a manner that is deemed to be in compli4 ance with the latest published editions of relevant 

5 consensus-based codes, specifications, and standards 

6 or any more restrictive Federal, State, or local flood7 plain management standards and consistent with 

8 floodplain management regulations for the local ju9 risdiction in which the qualified dwelling unit is lo10 cated. 

11 ‘‘(2) LATEST PUBLISHED EDITIONS.—The term 

12 ‘latest published editions means’, with respect to rel13 evant consensus-based codes, specifications, and 

14 standards, either of the 2 most recently published 

15 editions. 

16 ‘‘(e) LABOR COSTS.—For purposes of this section, 

17 expenditures for labor costs properly allocable to the onsite 

18 preparation, assembly, or original installation of the prop19 erty described in clause (i) or (ii) of subsection (c)(1)(A) 

20 shall be taken into account in determining the qualified 

21 disaster mitigation expenditures made by the taxpayer 

22 during the taxable year. 

23 ‘‘(f) INSPECTION COSTS.—For purposes of this sec24 tion, expenditures for the cost of any inspection required 

25 under subsection (d) which is properly allocable to the inVerDate Sep 11 2014 02:14 Jun 28, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1958.IS S1958

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1 spection of the preparation, assembly, or installation of 

2 the property described in clause (i) or (ii) of subsection 

3 (c)(1)(A) shall be taken into account in determining the 

4 qualified disaster mitigation expenditures made by the 

5 taxpayer during the taxable year. 

6 ‘‘(g) DOCUMENTATION.—Any taxpayer claiming the 

7 credit under this section shall provide the Secretary with 

8 adequate documentation regarding the specific qualified 

9 disaster mitigation expenditures made by the taxpayer 

10 during the taxable year, as well as such other information 

11 or documentation as the Secretary may require.’’. 

12 (b) CONFORMING AMENDMENT.—The table of sec13 tions for subpart A of part IV of subchapter A of chapter 

14 1 of such Code is amended by inserting after the item 

15 relating to section 25D the following new item: 

‘‘Sec. 25E. Disaster mitigation expenditures.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2019. 

19 SEC. 3. BUSINESS-RELATED CREDIT FOR DISASTER MITIGA20 TION. 

21 (a) IN GENERAL.—Subpart D of part IV of sub22 chapter A of chapter 1 of the Internal Revenue Code of 

23 1986 is amended by inserting after section 45S the fol24 lowing new section: 


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1 ‘‘SEC. 45T. DISASTER MITIGATION CREDIT. 

2 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

3 the disaster mitigation credit determined under this sec4 tion for any taxable year is an amount equal to 25 percent 

5 of the qualified disaster mitigation expenditures made by 

6 the taxpayer during the taxable year. 

7 ‘‘(b) MAXIMUM CREDIT.— 

8 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

9 the amount of the credit determined under sub10 section (a) for any taxable year shall not exceed 

11 $5,000. 

12 ‘‘(2) PHASEOUT.— 

13 ‘‘(A) IN GENERAL.—The amount under 

14 paragraph (1) for the taxable year shall be re15 duced (but not below zero) by an amount which 

16 bears the same ratio to the amount under such 

17 paragraph as— 

18 ‘‘(i) the amount (not less than zero) 

19 equal to the average gross receipts of the 

20 taxpayer over the 3 preceding taxable 

21 years minus $5,000,000, bears to 

22 ‘‘(ii) $5,000,000. 

23 ‘‘(B) INFLATION ADJUSTMENT.—In the 

24 case of any taxable year after 2020, each of the 

25 dollar amounts under subparagraph (A) shall 

26 be increased by an amount equal to— 


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1 ‘‘(i) such dollar amount, multiplied by 

2 ‘‘(ii) the cost-of-living adjustment de3 termined under section 1(f)(3) for the cal4 endar year in which the taxable year be5 gins, determined by substituting ‘calendar 

6 year 2019’ for ‘calendar year 2016’ in sub7 paragraph (A)(ii) thereof. 

8 ‘‘(C) ROUNDING.—If any reduction deter9 mined under subparagraph (A) is not a multiple 

10 of $50, or any increase under subparagraph (B) 

11 is not a multiple of $50, such amount shall be 

12 rounded to the nearest multiple of $50. 

13 ‘‘(c) QUALIFIED DISASTER MITIGATION EXPENDI14 TURE.—For purposes of this section, the term ‘qualified 

15 disaster mitigation expenditure’ has the same meaning 

16 given such term under paragraph (1) of section 25E(c), 

17 except that ‘place of business’ shall be substituted for 

18 ‘qualified dwelling unit’ each place it appears in such para19 graph. 

20 ‘‘(d) SPECIAL RULES.—Rules similar to the rules of 

21 subsections (d) through (g) of section 25E shall apply for 

22 purposes of this section.’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) Section 38(b) of such Code is amended by 

25 striking ‘‘plus’’ at the end of paragraph (31), by 


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1 striking the period at the end of paragraph (32) and 

2 inserting ‘‘, plus’’, and by adding at the end the fol3 lowing new paragraph: 

4 ‘‘(33) the disaster mitigation credit determined 

5 under section 45T(a).’’. 

6 (2) The table of sections for subpart D of part 

7 IV of subchapter A of chapter 1 of such Code is 

8 amended by inserting after the item relating to sec9 tion 45S the following new item: 

‘‘Sec. 45T. Disaster mitigation credit.’’. 

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to taxable years beginning after 

12 December 31, 2019. 

Æ 


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