SEC. 2. HURRICANE KATRINA DISASTER VICTIMS MADE 
MEMBERS OF TARGETED GROUPS UNDER 
WORK OPPORTUNITY TAX CREDIT. 
(a) IN GENERAL.—Paragraph (1) of section 51(d) of 
the Internal Revenue Code of 1986 (defining generally 
members of targeted group) is amended by striking ‘‘or’’ 
at the end of subparagraph (G), by striking the period 
at the end of subparagraph (H) and inserting ‘‘, or’’, and 
by inserting after subparagraph (H) the following new 
subparagraph: 
‘‘(I) a Hurricane Katrina disaster victim.’’. 
(b) QUALIFIED DISASTER VICTIM.—Subsection (d) 
of section 51 of such Code (relating to members of tar-
geted groups) is amended by redesignating paragraphs 
(10), (11), and (12) as paragraphs (11), (12), and (13), 
respectively, and by inserting after paragraph (9) the fol-
lowing new paragraph: 
‘‘(10) HURRICANE
KATRINA
DISASTER
VIC-
TIM.—The term ‘Hurricane Katrina disaster victim’ 
means an individual who is certified by the des-
ignated local agency as being a eligible to receive as-
sistance from the Federal Government under the 
Robert T. Stafford Disaster Relief and Emergency 
Assistance Act by reason of Hurricane Katrina.’’. 
(c) TERMINATION.—Subparagraph (B) of section 
51(c)(4) of such Code is amended by inserting ‘‘(2006 in
the case of a Hurricane Katrina disaster victim)’’ before 
the period. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to individuals who begin work for 
the employer after August 28, 2005. 
SEC. 3. HURRICANE KATRINA DISPLACED RESIDENT CRED-
IT. 
(a) IN GENERAL.—Subpart A of of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25D the following new 
section: 
‘‘SEC. 25E. HURRICANE KATRINA DISPLACED RESIDENT 
CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.— 
‘‘(1) IN GENERAL.—There shall be allowed as a 
credit against the tax imposed by this chapter for 
the taxable year with respect to all qualified dis-
placed persons residing without charge with the tax-
payer in the principal residence of the taxpayer an 
amount equal to the applicable percentage of 
$1,000. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage is the 
ratio (expressed as a percentage) which—
‘‘(A) the number of days the qualified dis-
place persons reside without charge with the 
taxpayer in the principal residence of the tax-
payer during the taxable year, bears to 
‘‘(B) 360. 
‘‘(b) LIMITATIONS.— 
‘‘(1) LIMITATION BASED ON ADJUSTED GROSS 
INCOME.—The amount of the credit allowable under 
subsection (a) shall be reduced (but not below zero) 
by $50 for each $1,000 (or fraction thereof) by 
which the taxpayer’s modified adjusted gross income 
exceeds the threshold amount. For purposes of the 
preceding sentence, the term ‘modified adjusted 
gross income’ means adjusted gross income in-
creased by any amount excluded from gross income 
under section 911, 931, or 933. 
‘‘(2) THRESHOLD AMOUNT.—For purposes of 
paragraph (1), the term ‘threshold amount’ means— 
‘‘(A) $110,000 in the case of a joint re-
turn, 
‘‘(B) $75,000 in the case of an individual 
who is not married, and 
‘‘(C) $55,000 in the case of a married in-
dividual filing a separate return.
For purposes of this paragraph, marital status shall 
be determined under section 7703. 
‘‘(3) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this subpart (other than this section and 
sections 23 and 25B) and section 27 for the 
taxable year. 
‘‘(c) QUALIFIED DISPLACED PERSON.—For purposes 
of this section, the term ‘qualified displaced person’ 
means, with respect to any taxpayer for any taxable year, 
any individual— 
‘‘(1) who is displaced by reason of Hurricane 
Katrina, and 
‘‘(2) who, after such displacement, resides with 
the taxpayer without charge for not less than 90 
days. 
Such term shall not include the spouse or any dependent 
of the taxpayer. 
‘‘(d) IDENTIFICATION
REQUIREMENT.—No credit 
shall be allowed under this section to a taxpayer with re-
spect to any qualified displaced person unless the taxpayer
includes the name and taxpayer identification number of 
such qualified displaced person on the return of tax for 
the taxable year. 
‘‘(e) TAXABLE YEAR MUST BE FULL TAXABLE 
YEAR.—Except in the case of a taxable year closed by rea-
son of the death of the taxpayer, no credit shall be allow-
able under this section in the case of a taxable year cov-
ering a period of less than 12 months. 
‘‘(f) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2006.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart A of of part IV of subchapter A of chapter 
1 of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 25E. Hurricane Katrina displaced resident credit.’’. 
SEC. 4. HOME PURCHASE BY VICTIMS OF HURRICANE 
KATRINA. 
(a) IN GENERAL.—Subpart A of of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25E the following new 
section: 
‘‘SEC. 25F. HOME PURCHASE BY INDIVIDUALS DISPLACED 
BY HURRICANE KATRINA. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli-
gible homebuyer who purchases a principal residence in