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H.R. 4861: Working Waterfront Disaster Mitigation Tax Credit Act

This bill, titled the Working Waterfront Disaster Mitigation Tax Credit Act, proposes changes to the U.S. Internal Revenue Code to establish a tax credit for specific hazard mitigation projects related to "working waterfront" properties. Here's a breakdown of its main components:

Tax Credit Overview

The bill introduces a tax credit of 30% for qualified investments made in connection with disaster mitigation projects for working waterfront properties. A working waterfront is defined as real estate used for water-dependent activities like commercial fishing and boating.

Credit Limitations

  • The tax credit is capped at a maximum of $300,000 per taxpayer. This amount may be adjusted for inflation starting from the 2026 tax year.
  • No credit can be claimed by a taxpayer if they have already claimed a credit under this section in any of the previous 10 years, with certain exceptions.

Qualified Investments

Qualified investments refer to the amounts spent on tangible property that is either constructed, reconstructed, or acquired for use in a disaster mitigation project. Eligible property must be depreciable, meaning it can be accounted for over time for tax purposes.

Eligible Projects

To qualify for the tax credit, projects must aim to prevent or reduce damage to working waterfront properties from natural hazards. The project designs must align with certain building codes and may include features such as:

  • Structural Elevation: Raising buildings to avoid flood damage.
  • Flood Risk Reduction: Implementing stormwater management systems and other flood prevention measures.
  • Shoreline Stabilization: Techniques to prevent erosion and landslides.
  • Floodproofing: Making buildings resilient against flooding.
  • Retrofitting: Upgrading existing structures to mitigate risks from natural hazards.
  • Warning Systems: Setting up systems to alert people of impending hazards.

Working Waterfront Definition

“Working waterfront property” is specified as property that:

  • Is located in the U.S. or its territories.
  • Is actively used for a trade or business that provides access to navigable waters and supports water-dependent activities.
  • Must meet a gross receipts threshold, which cannot exceed $47 million in average annual receipts over the past three years.

Regulatory Oversight

The Secretary of the Treasury, alongside the Federal Emergency Management Agency (FEMA), is tasked with establishing regulations and guidelines to implement this tax credit effectively.

Financial Adjustments for U.S. Possessions

Provisions within the bill provide for payments to U.S. possessions with tax systems similar to that of the U.S. to cover any losses incurred due to the new amendments. Payments will be made based on formulas established by the Treasury Secretary.

Effective Date

The proposed changes would take effect after December 31, 2025, for tax years ending after that date.

Relevant Companies

None found.

This is an AI-generated summary of the bill text. There may be mistakes.

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Sponsors

2 bill sponsors

Actions

2 actions

Date Action
Aug. 01, 2025 Introduced in House
Aug. 01, 2025 Referred to the House Committee on Ways and Means.

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