Sponsors (3)
The bill enables disaster-hit businesses and taxpayers to access immediate liquidity by monetizing certain tax credit carryforwards, but it narrows eligibility, creates timing limits, risks reduced federal revenue, and may pose administrative and fraud-control challenges.
Small businesses and other taxpayers in Presidential- or State-declared disaster areas can convert specified tax credit carryforwards into transferrable credits (up to their disaster-related expenditures), allowing them to monetize otherwise unusable credits within two years and improve immediate cash flow for recovery.
Affiliated or consolidated corporate groups can pool disaster-affected carryforwards by being treated as a single taxpayer, simplifying claims and reducing fragmentation of relief across related entities.
Businesses and taxpayers in disasters declared after December 31, 2023, are explicitly eligible for this relief, ensuring recent disaster-impacted entities can access the program.
Taxpayers broadly face reduced future federal tax revenue because transferrable credits lower near-term receipts, which could increase deficits or shift tax burdens to others.
Some taxpayers will be excluded because the rule limits eligible carryforwards to those specified in narrow statutory clauses, leaving owners of other credit types unable to monetize their carryforwards.
Businesses with disaster-related expenditures that fall outside the two-year window after the disaster declaration may be ineligible to treat those carryforwards as transferrable, reducing relief for some affected firms.
Based on analysis of 2 sections of legislative text.
Introduced January 8, 2026 by Lindsey O. Graham · Last progress January 8, 2026
Allows portions of certain general business credit carryforwards to be converted into transferrable tax credits for taxpayers affected by qualifying disasters, up to the amount of disaster-related expenditures in the taxable year. The rule applies to carryforwards for taxable years beginning after December 31, 2023, treats members of a consolidated group as one taxpayer for these rules, and limits Treasury from requiring registration for carryforwards tied to earlier taxable years until the online registration tool is updated. These changes amend the Internal Revenue Code rule for transferrable general business credits to expand liquidity and tax relief for disaster-affected taxpayers by permitting eligible disaster expenditures to be matched with transferrable credit treatment under specific existing credit categories.