HB2940, titled the Advancing Water Reuse Act, would amend the Internal Revenue Code to create a new federal investment tax credit for qualifying water reuse projects. The credit would equal 30 percent of qualified investment in eligible property placed in service for projects that install, replace, or modify onsite water recycling systems at industrial, manufacturing, data center, or food processing facilities; replace freshwater use with recycled municipal recycled water; or build or expand municipal water recycling systems to support the production of goods or services.
The bill defines eligible property as tangible depreciable property that is constructed, reconstructed, erected, or newly acquired by the taxpayer, and it applies certain existing tax rules for progress expenditures. It also includes a special rule allowing some transferred property to utilities to remain eligible when a binding written agreement assigns the credit to the original owner instead of the utility. The credit would be added to the general investment credit framework and would not apply to projects whose construction begins after December 31, 2032.
Impact
If enacted, the bill would add a new section 48F to the Internal Revenue Code and expand the federal investment tax credit regime to include water reuse infrastructure. It would directly affect taxpayers investing in industrial water recycling, municipal reuse systems, and related equipment, while also creating a tax incentive for utilities and private entities to structure certain property transfers and agreements to preserve credit eligibility. The amendments would apply prospectively after enactment, and the new credit would sunset for projects beginning construction after the end of 2032.
Sentiment
Based on the available context, the bill appears to have a generally positive, bipartisan policy orientation, with sponsorship from members associated with both parties and no recorded committee debate or votes showing opposition. The absence of transcripts or vote history suggests the measure had not yet generated significant public controversy at the time of referral. Overall, the bill is framed as a targeted incentive for water conservation and infrastructure investment rather than a broad tax overhaul.
Contention
No specific points of contention are documented in the provided materials, but potential areas of debate could include the cost of the tax expenditure, whether a federal credit is the best tool to promote water reuse, and how broadly the term qualifying projects should be interpreted. Stakeholders most likely to care about those issues include industrial water users, data centers, food processors, municipal water providers, utilities, and fiscal watchdogs concerned about revenue impacts. The special transfer rule for utilities could also raise questions about credit allocation and administrative complexity.