The "Advancing Water Reuse Act" introduces a tax credit for investments in qualifying water reuse projects, aiming to encourage water recycling and reduce freshwater use in industrial and municipal settings.
Darin LaHood
Representative
IL-16
The "Advancing Water Reuse Act" introduces a tax credit for investments in qualifying water reuse projects. This credit covers 30% of the qualified investment in projects that recycle water at industrial facilities, replace freshwater with recycled water, or expand municipal water recycling systems. This initiative aims to encourage water conservation and sustainable water management practices by incentivizing businesses and municipalities to invest in water reuse technologies. The credit applies to projects started before January 1, 2033.
New Bill Proposes 30% Tax Credit for Business Water Recycling Projects Through 2032
This bill, the "Advancing Water Reuse Act," aims to get certain industries to use less freshwater by offering a significant tax break. It proposes adding a new section (Sec. 48F) to the U.S. Internal Revenue Code, creating a 30% tax credit for businesses investing in specific water reuse projects. This applies to the cost of equipment and systems put into operation for these projects, targeting industrial, manufacturing, data center, and food processing facilities. The incentive is set to expire for projects starting after December 31, 2032.
How the Water Reuse Credit Works
So, what qualifies for this 30% credit? The bill outlines three main types of "qualifying water reuse projects":
- Onsite Recycling: Installing or upgrading systems within a facility (like a factory or data center) to treat and reuse its own water.
- Switching Sources: Modifying operations to use recycled water supplied by a municipal provider instead of fresh water for production processes.
- Boosting Municipal Supply: Building or expanding a city's water recycling system specifically to provide recycled water for these industrial uses.
The credit is calculated based on the "qualified investment," essentially the cost of the eligible equipment and property used in these projects. Think tangible stuff like pipes, filters, tanks, and control systems needed for the recycling process. There are also rules clarifying who gets the credit if the equipment is eventually transferred to a utility company.
Real-World Ripple Effects
The main goal here is clearly to encourage water-intensive industries to conserve water. For a manufacturing plant, this could mean investing in a closed-loop system to reuse cooling water, potentially lowering their water bills and getting a 30% tax credit on the setup cost. For a new data center, it might incentivize designing the facility from the ground up to use recycled municipal water for cooling, reducing strain on local drinking water supplies.
While this offers a direct financial benefit to participating companies and promotes environmental goals, it also represents a cost in terms of reduced tax revenue for the government. The benefits are targeted towards specific sectors, though the broader community might see positive effects from reduced demand on freshwater resources. The 2032 deadline creates a clear timeframe, pushing businesses to evaluate and potentially invest in water reuse technology sooner rather than later.