Water Conservation Rebate Tax Parity Act
- Bill Number
- H.R. 1871
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-03-05: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-04-22T08:07:17Z
AI-Generated Summary
Purpose of the Legislation
The Water Conservation Rebate Tax Parity Act (H.R. 1871) aims to encourage water conservation by updating tax rules. It expands an existing tax break so that certain subsidies for water-saving measures are not counted as taxable income, similar to how energy conservation subsidies are treated.
Key Provisions
- Expansion of Tax Exclusion: Amends Section 136 of the Internal Revenue Code to exclude from gross income (taxable income) subsidies for:
- Water conservation or efficiency measures (e.g., installations that reduce water use in homes).
- Storm water management measures (e.g., property modifications to handle rainwater and prevent flooding).
- Wastewater management measures (e.g., septic systems or similar setups for handling household waste water).
- Eligible Providers: Subsidies can come from public utilities (now including water providers), storm water management providers, or state/local governments, but only for a taxpayer's principal residence in the case of wastewater measures.
- Definitions:
- Water conservation or efficiency measure: Any assessment or property change mainly aimed at cutting water use or better managing demand in homes.
- Storm water management measure: Installations or modifications to control storm water and reduce flood risks for homes.
- Wastewater management measure: Property changes to handle wastewater, like septic tanks.
- Public utility: Expanded to include sellers of electricity, natural gas, or water to homes, businesses, or industries.
- Effective Date: Applies to subsidies received after December 31, 2021.
- No Inference Clause: The law does not imply any specific tax treatment for similar subsidies received before 2022.
Significant Changes to Existing Law
- Previously, Section 136 only excluded subsidies from public utilities for energy conservation measures (like energy-efficient appliances).
- This bill broadens the exclusion to cover water-related measures, adds new provider types (e.g., storm water providers), and includes government subsidies directly to residents.
- Updates headings and definitions in the tax code for clarity, such as renaming sections to include "water" alongside "energy."
Potential Impacts
- On Citizens: Homeowners and residents may save on taxes by not reporting these subsidies as income, making water-efficient upgrades more affordable and promoting eco-friendly home improvements.
- On Government Agencies: The IRS will need to adjust tax processing and guidance to handle the expanded exclusions, potentially increasing compliance workload but supporting broader environmental goals. State and local governments could see more uptake in their rebate programs.
- On International Relations: No direct impact, as this is a domestic tax policy focused on U.S. conservation efforts.
Main Stakeholders Affected
- Taxpayers/Individuals: Primarily homeowners benefiting from tax-free rebates for water-related home upgrades.
- Public Utilities and Providers: Water, energy, and storm water companies that offer subsidies, now able to do so without tax implications for customers.
- State and Local Governments: Entities providing rebates, encouraged to expand programs without worrying about federal tax complications.
- Environmental Groups: Indirectly supported through incentives for conservation practices.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens tax equity by aligning water conservation incentives with existing energy ones, potentially reducing disputes over subsidy taxation. The "no inference" clause protects past tax treatments from retroactive challenges.
- Constitutional: No apparent issues; it falls under Congress's power to regulate taxation and promote general welfare through environmental incentives.
- Political: Advances bipartisan environmental priorities (introduced by representatives from different parties), signaling support for sustainable resource management amid climate concerns, but may face debate over federal tax code expansions.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (12)
Rep. Moore, Blake D. [R-UT-1], Rep. Chu, Judy [D-CA-28], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Costa, Jim [D-CA-21], Rep. Nunn, Zachary [R-IA-3], Rep. Ruiz, Raul [D-CA-25], Rep. Levin, Mike [D-CA-49], Rep. Friedman, Laura [D-CA-30], Rep. Torres, Norma J. [D-CA-35], Rep. Brownley, Julia [D-CA-26], Rep. Min, Dave [D-CA-47], Rep. Cisneros, Gilbert Ray [D-CA-31]
Recent Actions
- 2025-03-05: Referred to the House Committee on Ways and Means.
- 2025-03-05: Introduced in House
- 2025-03-05: Introduced in House
Bill Versions
- Water Conservation Rebate Tax Parity Act — issued 2025-03-05 — PDF (6 pages)