SB 2538, titled the Working Waterfront Disaster Mitigation Tax Credit Act, would amend the Internal Revenue Code to create a new federal investment tax credit for certain hazard-mitigation projects on qualifying working waterfront property. The credit would equal 30 percent of qualified investment, up to $300,000 per taxpayer, with inflation adjustments beginning after 2026. A taxpayer could generally claim the credit only once in a 10-year period, and the bill coordinates the new credit with existing rehabilitation and investment credit rules.
The bill defines eligible projects broadly to include structural elevation, flood-risk reduction, shoreline stabilization, floodproofing, retrofitting, and warning systems, so long as the project is substantially designed to meet specified International Code Council building standards and is intended to prevent or reduce damage from natural hazards. To qualify, the property must be used in an active trade or business that serves or supports water-dependent activities such as commercial fishing, recreational fishing and boating, boatbuilding, aquaculture, dredging, and related uses. The business must also meet a gross receipts test of no more than $47 million on average over the prior three years, subject to aggregation and inflation adjustments.
The bill would affect federal tax law by adding a new section 48F to the Internal Revenue Code and by amending related provisions governing the investment credit, basis adjustments, and recapture rules. It also directs the Treasury Department, in consultation with FEMA, to issue implementing regulations or guidance. The effective date would apply to property placed in service after December 31, 2025, and the bill includes special payment rules for U.S. possessions with and without mirror code tax systems.
Overall sentiment appears favorable but limited to introduction-stage activity, with no recorded committee debate or votes in the available materials. The bill was introduced by Senators King and Cassidy and referred to the Senate Committee on Finance, suggesting bipartisan sponsorship and a policy focus on resilience for coastal and waterfront economies. Because there are no transcripts or votes, there is no documented opposition in the provided record.
The main policy issues likely to draw attention are the scope of qualifying waterfront businesses, the size and frequency limits of the credit, and the federal revenue cost of creating a new tax incentive. Potential points of contention may include whether the $47 million gross-receipts threshold is too broad or too narrow, whether the $300,000 cap is sufficient for major mitigation projects, and how Treasury will define and administer eligible hazard-mitigation measures and code compliance.
The bill would add a new federal business tax credit for disaster-mitigation investments in qualifying working waterfront property, thereby expanding the Internal Revenue Code’s investment credit framework. It would also make conforming changes to the basis, recapture, and credit coordination rules, and it would require Treasury and FEMA to issue guidance. The practical effect would be to subsidize resilience upgrades for eligible waterfront businesses and properties in the United States and U.S. possessions.
The available record suggests a generally positive and bipartisan posture toward the bill, as shown by its introduction by Senators King and Cassidy. However, there is no committee transcript or vote history in the provided materials, so sentiment can only be inferred from sponsorship and the bill’s referral to the Finance Committee. No formal opposition or support statements are available in the record.
No specific contention is documented in the provided materials because there are no committee transcripts or votes. Based on the bill text, likely areas of debate would include the eligibility threshold for businesses, the breadth of covered mitigation projects, the $300,000 credit cap, and the administrative burden of defining qualifying waterfront property and approved building-code standards. Stakeholders most likely to care include coastal and waterfront businesses, fishing and boating industries, aquaculture operators, local governments, insurers, and federal tax administrators.