The bill applies retroactively to taxable years beginning after December 31, 2023, promoting proactive investment in safety enhancements like fire-resistant materials, structural improvements, and systems that manage flood risks. Notably, the bill requires that these expenditures comply with the latest construction codes and standards aimed at natural hazard mitigation, ensuring that these improvements are both effective and sustainable. By introducing these tax credits, SB2106 aims to foster a culture of preparedness among property owners, potentially reducing the economic and personal losses associated with natural disasters.
Summary
SB2106, also known as the Shelter Act, aims to amend the Internal Revenue Code of 1986 by introducing tax credits specifically for disaster mitigation expenditures. The bill provides a nonrefundable personal credit of 25% of qualifying expenditures, with a maximum annual credit of $2,500 for individuals and $5,000 for businesses. This incentive is designed to encourage property owners to invest in improvements that can protect their homes and businesses from the impacts of natural disasters, particularly in areas that have experienced federal disaster declarations in the past five years.
Contention
Opponents of the bill may argue that while it provides a financial incentive for property improvements, it could also lead to unintended fiscal burdens for the government due to reduced tax revenues. Additionally, there could be concerns about the equitable distribution of benefits, particularly for lower-income individuals who may not have the capital to invest in these improvements upfront. Advocates emphasize that the long-term savings from reduced disaster recovery costs can justify the initial investment, suggesting that the societal benefits outweigh potential financial drawbacks.
American Innovation Act of 2023 This bill revises the tax treatment of business start-up or organizational expenditures. Specifically, it allows an election to deduct such expenditures in an amount equal to the lesser of the aggregate amount of such expenditures incurred by an active trade of business, or $20,000, reduced by the amount by which such aggregate amount exceeds $120,000. The remaining amount of such expenditures shall be amortized over the 180 month period after the trade or business begins. The bill also revises the tax treatment of partnership syndication fees and start-up net operating losses and tax credits after an ownership change.