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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2538 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 2538
To amend the Internal Revenue Code of 1986 to provide a credit for
hazard mitigation projects in connection with certain working
waterfront property.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 30, 2025
Mr. King (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 for
hazard mitigation projects in connection with certain working
waterfront property.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Working Waterfront Disaster
Mitigation Tax Credit Act''.
SEC. 2. WORKING WATERFRONT DISASTER MITIGATION PROJECT CREDIT.
(a) In General.--Subpart E of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 48E the following new section:
``SEC. 48F. WORKING WATERFRONT DISASTER MITIGATION PROJECT CREDIT.
``(a) In General.--For purposes of section 46, the working
waterfront disaster mitigation project for any taxable year is an
amount equal to 30 percent of the qualified investment for such taxable
year.
``(b) Limitations.--
``(1) Dollar limitation.--
``(A) In general.--The amount of the credit allowed
under this section with respect to any taxpayer shall
not exceed $300,000.
``(B) Aggregation rules.--All taxpayers treated as
a single employer under subsection (a) or (b) of
section 52 or subsection (m) or (o) of section 414
shall be treated as a single taxpayer for purposes of
subparagraph (A).
``(C) Inflation adjustment.--In the case of any
taxable year beginning after December 31, 2026, the
$300,000 dollar amount in subparagraph (A) shall be
increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
by substituting `calendar year 2025' for
`calendar year 2016' in subparagraph (A)(ii)
thereof.
If any amount as increased under the preceding sentence
is not a multiple of $10,000, such amount shall be
rounded to the nearest multiple of $10,000.
``(2) Time limitation.--No credit shall be allowed to a
taxpayer for a taxable year if such taxpayer has been allowed a
credit under this section (other than qualified progress
expenditures allowed under subsection (c)(3)) for any taxable
year in the 10-year period ending with the last day of such
taxable year.
``(c) Qualified Investment.--
``(1) In general.--For purposes of this section, the
qualified investment for any taxable year is the basis of
eligible property placed in service by the taxpayer during such
taxable year which is part of a qualifying working waterfront
disaster mitigation project.
``(2) Eligible property.--For purposes of this subsection,
the term `eligible property' means property--
``(A) which is tangible property,
``(B) with respect to which depreciation (or
amortization in lieu of depreciation) is allowable, and
``(C) which is--
``(i) constructed, reconstructed, or
erected by the taxpayer, or
``(ii) acquired by the taxpayer if the
original use of such property commences with
the taxpayer.
``(3) Certain qualified progress expenditures rules made
applicable.--Rules similar to the rules of subsections (c)(4)
and (d) of section 46 (as in effect on the day before the
enactment of the Revenue Reconciliation Act of 1990) shall
apply for purposes of this section.
``(4) Coordination with rehabilitation credit.--The
qualified investment with respect to any qualifying working
waterfront disaster mitigation project for any taxable year
shall not include that portion of the basis of any project
which is attributable to qualified rehabilitation expenditures
(as defined in section 47(c)(2)).
``(d) Qualifying Working Waterfront Disaster Mitigation Project.--
For purposes of this section--
``(1) In general.--The term `qualifying working waterfront
disaster mitigation project' means any project--
``(A) which is substantially designed in compliance
with--
``(i) in the case of any project placed in
service before January 1, 2032, the 2021
International Code Council International
Building Code, and
``(ii) in the case of any project placed in
service on or after such date, the most recent
applicable International Code Council model
code which has been affirmed by the Secretary
for purposes of this section not later than 5
years before the date such project is placed in
service, and
``(B) which designed to prevent or mitigate damage
to working waterfront property from natural hazards
using one or more of the following:
``(i) Structural elevation.--The elevation
of continuous foundation walls, the elevation
of structures on open foundations (such as
piles, piers, posts or columns), the elevation
of structures on fill, the conversion of the
second story, and other methods involving
structural elevation as the Secretary may
prescribe.
``(ii) Flood risk reduction.--Stormwater
management (including the construction,
installation or modification of culverts,
drainage pipes, pumping stations, floodgates,
bioswales, detention and retention basins, and
other stormwater management facilities), flood
diversion and storage measures, slope
stabilization or grading to direct flood waters
away from businesses, flood protection measures
for water and sanitary sewer systems or other
utility systems, vegetation management for
shoreline stabilization (coastal, riverine,
riparian and other littoral zones), flood
protection and stabilization measures for roads
and bridges, and such other flood risk
reduction methods as the Secretary may
prescribe.
``(iii) Shoreline stabilization.--Reducing
the risk to structures or infrastructure from
erosion and landslides (including through the
installation of geosynthetics, surface and
subsurface drainage, stabilizing sod, and
vegetative buffer strips), preserving mature
vegetation, decreasing slope angles,
stabilizing with riprap and other means of
slope anchoring, and other shoreline
stabilization methods as the Secretary may
prescribe.
``(iv) Floodproofing.--Creating a space
that is protected by walls that are
substantially impermeable and resistant to
flood loads, the use of flood-damage-resistant
materials and construction techniques to
minimize flood damage to areas below the flood
protection level of a structure.
``(v) Retrofitting.--Changes made to an
existing structure to reduce or eliminate the
possibility of damage to that structure from
flooding, erosion, extreme temperatures, high
winds, or other hazards.
``(vi) Warning systems.--Equipment and
systems to warn residents of impending hazards
(including enhanced or reversed 911 systems),
weather stations, rain gauges, flood alarms,
and such other warning systems as the Secretary
may prescribe.
``(2) Working waterfront property.--The term `working
waterfront property' means real property--
``(A) which is located within the United States or
a possession of the United States, and
``(B) which is used by the taxpayer to carry on an
active trade or business--
``(i) which meets the gross receipts test
of paragraph (3), and
``(ii) which--
``(I) provides access to navigable
waters to persons engaged in commercial
fishing, recreational fishing and
boating, boatbuilding, aquaculture,
dredging, or other water-dependent
activities, and
``(II) is used for or supports
activities described in subclause (I).
``(3) Gross receipts test.--
``(A) In general.--A trade or business meets the
gross receipts test of this paragraph if the average
annual gross receipts of such trade or business for the
3-taxable-year period preceding such taxable year does
not exceed $47,000,000.
``(B) Aggregation rules.--All trades or business of
a taxpayer that are treated as a single employer under
subsection (a) or (b) of section 52 or subsection (m)
or (o) of section 414 shall be treated as one trade or
business for purposes of subparagraph (A).
``(C) Other rules.--Rules similar to the rules of
section 448(c)(3) shall apply for purposes of this
paragraph.
``(D) Inflation adjustment.--In the case of any
taxable year beginning after December 31, 2026, the
dollar amount in subparagraph (A) shall be increased by
an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
by substituting `calendar year 2025' for
`calendar year 2016' in subparagraph (A)(ii)
thereof.
If any amount as increased under the preceding sentence
is not a multiple of $1,000,000, such amount shall be
rounded to the nearest multiple of $1,000,000.
``(e) Regulations.--The Secretary, in consultation with the
Administrator of the Federal Emergency Management Agency, shall issue
such regulations or other guidance as may be necessary or appropriate
to carry out the purposes of this section.''.
(b) Inclusion in Investment Credit.--Section 46 of the Internal
Revenue Code of 1986 is amended by striking ``and'' at the end of
paragraph (6), by striking the period at the end of paragraph (7) and
inserting ``, and'', and by adding at the end the following new
paragraph:
``(8) the working waterfront disaster mitigation project
credit.''.
(c) Conforming Amendments.--
(1) Section 49(a)(1)(C) of the Internal Revenue Code of
1986 is amended by striking ``and'' at the end of clause (vii),
by striking the period at the end of clause (viii) and
inserting ``, and'', and by adding at the end the following:
``(ix) the basis of any property which is
part of a qualifying working waterfront
disaster mitigation project (as defined in
section 48F(d)(2)).''.
(2) Section 50(a)(2)(E) of such Code is amended by striking
``or 48E(e)'' and inserting ``48E(e), or 48F(c)(2)''.
(3) The table of sections for subpart E of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 48E the following new item:
``Sec. 48F. Working waterfront disaster mitigation project credit.''.
(d) Treatment of Possessions.--
(1) Payments to possessions with mirror code tax systems.--
The Secretary of the Treasury shall pay to each possession of
the United States which has a mirror code tax system amounts
equal to the loss (if any) to that possession by reason of the
amendments made by this section. Such amounts shall be
determined by the Secretary of the Treasury based on
information provided by the government of the respective
possession.
(2) Payments to other possessions.--The Secretary of the
Treasury shall pay to each possession of the United States
which does not have a mirror code tax system amounts estimated
by the Secretary of the Treasury as being equal to the
aggregate benefits (if any) that would have been provided to
residents of such possession by reason of the amendments made
by this section if a mirror code tax system had been in effect
in such possession. The preceding sentence shall not apply
unless the respective possession has a plan, which has been
approved by the Secretary of the Treasury, under which such
possession will promptly distribute such payments to its
residents.
(e) Effective Date.--The amendments made by this section shall
apply to periods after December 31, 2025, in taxable years ending after
such date, under rules similar to the rules of section 48(m) of the
Internal Revenue Code of 1986 (as in effect on the day before the date
of the enactment of the Revenue Reconciliation Act of 1990).
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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