The Shelter Act creates two new tax credits to help people and businesses pay for improvements that protect their homes and workplaces from natural disasters like hurricanes, floods, wildfires, and earthquakes. Starting in 2026, homeowners can claim a credit worth 25% of what they spend on disaster-proofing their homes, up to $3,750 per year (or $7,500 if filing jointly), with a lifetime limit of $15,000 per home. This credit phases out for higher-income households—if you make more than $100,000, the credit starts to shrink. Eligible improvements include reinforcing roofs, installing storm shutters, elevating homes above flood levels, clearing flammable vegetation, installing backup generators, and creating safe rooms for severe weather.

Businesses get a similar credit worth 25% of their disaster mitigation spending, capped at $5,000 per year, which also phases out based on business income. Both credits only apply if your home or business is in an area that has experienced a federal disaster declaration in the past five years, or in a nearby area, or in a designated disaster resilience zone. The improvements must meet current building codes and standards, and you can't claim the credit for work that's already been paid for by government grants or assistance. If you don't use the full credit in one year, you can carry it forward for up to five years. The credits start applying to taxes filed in 2026 and will automatically adjust for inflation each year after that.