New Federal Program Allocates $500M Annually to Cover Low-Income Households' Water and Sewer Bills

The New Water Safety Net

This new legislation, the Low-Income Household Water Assistance Program Establishment Act, is setting up a dedicated federal program to help people pay for water and sewer services. Think of it as the water equivalent of the existing energy assistance program (LIHEAP). The Secretary of Health and Human Services (HHS), working with the EPA, will hand out grants to states and tribes. The goal? To make sure public water systems and wastewater facilities get paid, and struggling households get to keep the taps running and the toilets flushing, covering both past-due amounts and regular service rates.

This isn't a small, temporary measure. Congress has authorized $500 million annually from fiscal year 2026 through 2030 to fund this effort. For utilities, this means a reliable way to cover customer arrears, which is a big deal for their bottom line. For regular folks, it means one less essential bill threatening to put them in the red.

Who Gets the Lifeline?

So, who qualifies as "low-income"? The bill keeps it straightforward by linking eligibility to existing programs. If you already receive aid like SNAP benefits, SSI, certain VA pensions, or help through LIHEAP, you’re automatically considered eligible.

If you aren’t on those programs, you still qualify if your household income is less than the highest of three thresholds: 150% of the federal poverty level, 60% of your state’s median income, or 60% of your area’s median income. This three-way test is smart because it recognizes that the cost of living—and what constitutes low-income—varies wildly between, say, a major coastal city and a rural county.

Where the Money Flows

Grants will go primarily to states and Indian tribes that already manage LIHEAP funds. When HHS decides how much money each area gets, they aren't just doing a simple population count. They’re looking at two key factors: the percentage of households below 150% of the poverty level, and the percentage of households that spend over 30% of their monthly income just on housing costs. This allocation method is designed to prioritize areas where the financial squeeze is the tightest.

Crucially, the bill reserves up to 3% of the total funds specifically for Indian tribes, acknowledging their unique needs and challenges in water access. Furthermore, the bill creates a special carve-out to fund qualified nonprofits that will focus on helping water operators in rural, underserved, or tribal areas access these new funds. This is a practical move that recognizes that smaller, often volunteer-run, rural water systems need extra help navigating federal grants.

The Supplement, Not Supplant Rule

Here’s the fine print that actually matters: Any state, tribe, or nonprofit receiving this federal money cannot use it to replace or cut back on existing local or state programs that already help low-income households with water bills. The funds must be used to add to or boost those existing programs.

This is a critical provision that prevents states from using federal money to balance their own budgets by cutting local aid. Instead, the federal assistance acts as a genuine supplement, ensuring that the total amount of water assistance available to the public actually increases, rather than just shifting the burden from the state to the federal government. To make sure this whole system works smoothly, HHS is tasked with providing technical assistance to help grant recipients set up data-sharing agreements, making it easier to confirm if a household is already eligible based on their participation in other aid programs. It’s all about cutting through the bureaucratic red tape so the money gets to the people who need it faster.