‘‘(VI) wall components for wall 
assemblies that conform to ignition-re-
sistant construction standards, 
‘‘(VII) a wall-to-foundation an-
chor or connector, or a shear transfer 
anchor or connector, 
‘‘(VIII) wood structural panel 
sheathing for strengthening cripple 
walls, 
‘‘(IX) anchorage of the masonry 
chimney to the framing, 
‘‘(X) prefabricated lateral resist-
ing systems, 
‘‘(XI) a standby generator sys-
tem consisting of a standby generator 
and an automatic transfer switch, 
‘‘(XII) a storm shelter that meets 
the design and construction standards 
established by the International Code 
Council and the National Storm Shel-
ter Association (ICC–500), or a safe 
room that satisfies the criteria con-
tained in— 
‘‘(aa) the publication of the 
Federal Emergency Management 
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Agency entitled ‘Safe Rooms for 
Tornadoes and Hurricanes’ (P– 
361), or 
‘‘(bb) the publication of the 
Federal Emergency Management 
Agency entitled ‘Taking Shelter 
from the Storm’ (P–320), 
‘‘(XIII) a lightning protection 
system, 
‘‘(XIV) exterior walls, doors, win-
dows, or other exterior dwelling unit 
elements that conform to ignition-re-
sistant construction standards, 
‘‘(XV) exterior deck or fence 
components that conform to ignition- 
resistant construction standards, 
‘‘(XVI) structure-specific water 
hydration systems, including fire miti-
gation systems such as interior and 
exterior sprinkler systems, 
‘‘(XVII) water capture and deliv-
ery systems to accommodate drought 
events or to decrease water use, in-
cluding the design of such systems, 
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‘‘(XVIII) flood openings for fully 
enclosed areas below the lowest floor 
of the dwelling unit, 
‘‘(XIX) lateral bracing for wall 
elements, foundation elements, and 
garage doors or other large openings 
to resist seismic loads, or 
‘‘(XX) automatic shutoff valves 
for water and gas lines, or 
‘‘(iii) for services or equipment to— 
‘‘(I) create buffers around the 
qualified dwelling unit through the re-
moval or reduction of flammable vege-
tation, including vertical clearance of 
tree branches, 
‘‘(II) create buffers around the 
dwelling unit through— 
‘‘(aa) the removal of exterior 
deck or fence components or igni-
tion-prone landscape features, or 
‘‘(bb) replacement of the 
components or features described 
in item (aa) with components or 
features that conform to ignition- 
resistant construction standards, 
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‘‘(III) perform fire maintenance 
procedures identified by the Federal 
Emergency Management Agency or 
the United States Forest Service, in-
cluding fuel management techniques 
such as creating fuel and fire breaks, 
‘‘(IV) gather and analyze water 
and weather data to better under-
stand the local climate and drought 
history, 
‘‘(V) replace flammable vegeta-
tion with less flammable species, or 
‘‘(VI) determine the risk of nat-
ural disasters which may occur in the 
area in which the qualified dwelling 
unit is located, or 
‘‘(iv) for property relating to satis-
fying the standards required for receipt of 
a FORTIFIED designation from the In-
surance Institute for Business and Home 
Safety, provided that the qualified dwelling 
unit receives such designation following in-
stallation of such property. 
‘‘(B) EXCEPTION.—The term ‘qualified 
disaster mitigation expenditure’ shall not in-
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clude any expenditure or portion thereof which 
is paid, funded, or reimbursed by a Federal, 
State, or local government entity, or any polit-
ical subdivision, agency, or instrumentality 
thereof. 
‘‘(2) QUALIFIED DWELLING UNIT.—The term 
‘qualified dwelling unit’ means a dwelling unit which 
is— 
‘‘(A) located— 
‘‘(i) in the United States or in a terri-
tory of the United States, and 
‘‘(ii) in an area— 
‘‘(I) in which a Federal disaster 
declaration has been made within the 
preceding 10-year period, or 
‘‘(II) which is adjacent to an 
area described in subclause (I), and 
‘‘(B) used as a residence by the taxpayer. 
‘‘(d) LIMITATION.— 
‘‘(1) IN GENERAL.—In the case of an expendi-
ture described in clause (i) or (ii) of subsection 
(c)(1)(A), such expenditure shall be taken into ac-
count in determining the qualified disaster mitiga-
tion expenditures made by the taxpayer during the 
taxable year only if the onsite preparation, assembly, 
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or original installation of the property with respect 
to which such expenditure is made has been com-
pleted in a manner that is deemed to be in compli-
ance with the latest published editions of relevant 
consensus-based codes, specifications, and standards 
or any more restrictive Federal, State, or local flood-
plain management standards and consistent with 
floodplain management regulations for the local ju-
risdiction in which the qualified dwelling unit is lo-
cated. 
‘‘(2) LATEST PUBLISHED EDITIONS.—The term 
‘latest published editions’ means, with respect to rel-
evant consensus-based codes, specifications, and 
standards, either of the 2 most recently published 
editions. 
‘‘(e) LABOR COSTS.—For purposes of this section, 
expenditures for labor costs properly allocable to the onsite 
preparation, assembly, or original installation of the prop-
erty described in clause (i) or (ii) of subsection (c)(1)(A) 
shall be taken into account in determining the qualified 
disaster mitigation expenditures made by the taxpayer 
during the taxable year. 
‘‘(f) INSPECTION COSTS.—For purposes of this sec-
tion, expenditures for the cost of any inspection required 
under subsection (d) which is properly allocable to the in-
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spection of the preparation, assembly, or installation of 
the property described in clause (i) or (ii) of subsection 
(c)(1)(A) shall be taken into account in determining the 
qualified disaster mitigation expenditures made by the 
taxpayer during the taxable year. 
‘‘(g) DOCUMENTATION.—Any taxpayer claiming the 
credit under this section shall provide the Secretary with 
adequate documentation regarding the specific qualified 
disaster mitigation expenditures made by the taxpayer 
during the taxable year, as well as such other information 
or documentation as the Secretary may require.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for subpart A of part IV of subchapter A of chapter 
1 of such Code is amended by inserting after the item 
relating to section 25D the following new item: 
‘‘Sec. 25E. Disaster mitigation expenditures.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 3. BUSINESS-RELATED CREDIT FOR DISASTER MITIGA-
TION. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 45T the fol-
lowing new section: 
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‘‘SEC. 45U. DISASTER MITIGATION CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
the disaster mitigation credit determined under this sec-
tion for any taxable year is an amount equal to 25 percent 
of the qualified disaster mitigation expenditures made by 
the taxpayer during the taxable year. 
‘‘(b) MAXIMUM CREDIT.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the amount of the credit determined under sub-
section (a) for any taxable year shall not exceed 
$5,000. 
‘‘(2) PHASEOUT.— 
‘‘(A) IN
GENERAL.—The amount under 
paragraph (1) for the taxable year shall be re-
duced (but not below zero) by an amount which 
bears the same ratio to the amount under such 
paragraph as— 
‘‘(i) the amount (not less than zero) 
equal to the average gross receipts of the 
taxpayer over the 3 preceding taxable 
years minus $5,000,000, bears to 
‘‘(ii) $5,000,000. 
‘‘(B) INFLATION
ADJUSTMENT.—In the 
case of any taxable year after 2022, each of the 
dollar amounts under subparagraph (A) shall 
be increased by an amount equal to— 
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‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2021’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
‘‘(C) ROUNDING.—If any reduction deter-
mined under subparagraph (A) is not a multiple 
of $50, or any increase under subparagraph (B) 
is not a multiple of $50, such amount shall be 
rounded to the nearest multiple of $50. 
‘‘(c) QUALIFIED DISASTER MITIGATION EXPENDI-
TURE.—For purposes of this section, the term ‘qualified 
disaster mitigation expenditure’ has the same meaning 
given such term under paragraph (1) of section 25E(c), 
except that ‘place of business’ shall be substituted for 
‘qualified dwelling unit’ each place it appears in such para-
graph. 
‘‘(d) SPECIAL RULES.—Rules similar to the rules of 
subsections (d) through (g) of section 25E shall apply for 
purposes of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) of such Code is amended by 
striking ‘‘plus’’ at the end of paragraph (32), by 
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striking the period at the end of paragraph (33) and 
inserting ‘‘, plus’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(34) the disaster mitigation credit determined 
under section 45U(a).’’. 
(2) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 45T the following new item: 
‘‘Sec. 45U. Disaster mitigation credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
Æ 
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