If enacted, this legislation is expected to influence state laws by establishing a clear framework for tax credits dedicated to disaster preparedness. The bill articulates clearly defined criteria for what constitutes a qualified disaster mitigation expenditure, including improvements that reinforce structures against wind or flooding, and it mandates compliance with relevant safety codes. This could lead to a shift in building practices as both homeowners and businesses seek to take advantage of these financial incentives, thereby potentially reducing the economic impact of natural disasters on communities.
Summary
House Bill 4305, known as the Shelter Act, proposes amendments to the Internal Revenue Code of 1986 to offer tax credits for disaster mitigation expenditures. The bill allows individuals and businesses to claim a non-refundable tax credit equal to 25% of their qualified disaster mitigation expenditures. For individuals, the maximum credit is limited to $2,500, while businesses can claim up to $5,000 per year. This initiative aims to incentivize investments in structural improvements to enhance resilience against natural disasters, particularly in areas recently declared disaster zones by federal authorities.
Contention
Notable points of contention surround the eligibility criteria for the tax credits, particularly concerning the geographical limitations imposed by the bill. Critics may argue that restricting the benefits only to certain disaster-designated zones could leave out many areas at risk of natural catastrophes who do not receive such federal declarations. Additionally, the bill could face scrutiny regarding its financial implication on local and state tax revenues due to the introduction of these credits, which could be perceived as a double-edged sword in promoting mitigation efforts versus ensuring adequate funding for other essential state programs.
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.