Advancing Water Reuse Act
- Bill Number
- S. 4506
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-05-13: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-06-17T11:03:26Z
AI-Generated Summary
Advancing Water Reuse Act (S. 4506)
Purpose
This legislation creates a new tax incentive under the Internal Revenue Code to encourage investments in projects that recycle and reuse water, reducing reliance on freshwater sources in industrial and municipal settings.
Key Provisions
- Establishes a 30 percent investment tax credit for the qualified costs of property placed in service as part of a qualifying water reuse project.
- Defines a qualifying water reuse project as one that:
- Installs, replaces, or modifies an onsite water recycling system in industrial, manufacturing, data center, or food processing facilities.
- Replaces freshwater use with recycled water from a municipal provider for producing goods or services.
- Builds or expands a municipal water recycling system to supply recycled water for similar purposes.
- Specifies that qualified property includes tangible assets for which depreciation is allowed, whether constructed or acquired by the taxpayer.
- Applies rules similar to existing progress expenditure provisions for certain ongoing projects.
- Includes a special rule allowing a taxpayer to claim the credit for property transferred to a utility under a binding agreement, while the utility cannot claim the credit for the same property.
- Sets a termination date: the credit applies only to projects placed in service within 10 years of the law's enactment.
- Makes the credit part of the general investment tax credit framework.
Significant Changes to Existing Law
- Adds a new Section 48F to the Internal Revenue Code, creating the qualifying water reuse project credit.
- Amends Section 46 of the Internal Revenue Code to include this new credit alongside other investment credits.
- Updates the table of sections in the tax code to reference the new provision.
- Applies the changes to projects where construction begins after the date of enactment.
Potential Impacts
- May lower the after-tax cost of investments in water recycling infrastructure for businesses and local governments.
- Could affect the Internal Revenue Service by requiring administration and verification of new credit claims.
- Influences water management practices by supporting the shift from freshwater to recycled sources in production and services.
- Limited direct effects on international relations, as the provisions focus on domestic tax and infrastructure incentives.
Main Stakeholders Affected
- Industrial, manufacturing, data center, and food processing facilities seeking to implement water recycling.
- Municipal water providers and local governments developing or expanding recycling systems.
- Utilities receiving transferred property under special agreement rules.
- Taxpayers and businesses making qualified investments in these projects.
Notable Legal, Constitutional, or Political Implications
- Operates as a standard tax expenditure amendment within the Internal Revenue Code, with no apparent constitutional conflicts in the text.
- Uses a 10-year sunset provision to limit the duration of the credit.
- Integrates with existing investment credit rules, maintaining consistency in tax administration.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Sen. Britt, Katie Boyd [R-AL], Sen. Cortez Masto, Catherine [D-NV]
Recent Actions
- 2026-05-13: Read twice and referred to the Committee on Finance.
- 2026-05-13: Introduced in Senate
Bill Versions
- Advancing Water Reuse Act — issued 2026-05-13 — PDF (6 pages)