Advancing Water Reuse Act
SB4506, 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 the taxpayer’s qualified investment in eligible property placed in service for a qualifying project. Eligible projects include installing, replacing, or modifying on-site water recycling systems at industrial, manufacturing, data center, or food processing facilities; replacing freshwater use with recycled water from a municipal provider; or building or expanding municipal water recycling systems to secure recycled water for business production or services.
The bill defines qualifying 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 certain property transferred to a utility to still qualify for the credit under a binding written agreement, and it limits the credit to projects placed in service within 10 years of enactment. The amendments would apply to projects whose construction begins after enactment, and the credit would be added to the general investment credit framework in section 46 of the tax code.
If enacted, the bill would create a new section 48F in the Internal Revenue Code and expand the federal investment tax credit regime to cover water reuse infrastructure. It would directly affect taxpayers investing in industrial water recycling, municipal recycled-water supply systems, and related infrastructure, while also influencing utilities and municipal water providers that participate in project arrangements. The measure would likely encourage capital investment in water conservation and reuse technologies by reducing after-tax project costs.
The available context suggests generally positive, bipartisan support for the concept, as the bill was introduced by Senator Luján with Senator Britt as a cosponsor. The bill’s title and structure indicate a policy goal of promoting water efficiency and reuse rather than imposing regulatory mandates. No committee transcript or vote record is available here, so there is no evidence of formal opposition or amendment debate in the provided materials.
The main policy questions likely concern the cost and design of the tax credit, including whether a 30 percent credit is the right incentive level, which industries and project types should qualify, and how to prevent misuse or overly broad eligibility. Another possible point of contention is the special transfer rule for property moved to utilities, which could raise questions about who should receive the credit in public-private arrangements. Because the bill is tax-based rather than regulatory, any disagreement would likely center on federal revenue effects, fairness among sectors, and whether the credit should be temporary or extended beyond the 10-year placement-in-service window.