Utah Valley Times

U.S. Representatives John Curtis (R-UT-03) and Jared Huffman (D-CA-02) announced plans to reintroduce legislation aimed at amending federal tax law. The proposed changes would exempt homeowners from paying income tax on rebates received from water utilities for water conservation and runoff management improvements. Representatives Judy Chu (D-CA-28) and Doug LaMalfa (R-CA-01) have also joined as original cosponsors.

“This legislation is crucial for Utah, ensuring that incentives for water efficiency are accessible without the burden of federal taxes,” said Rep. Curtis. “This measure aligns with our commitment to preserving Utah's precious water resources, encouraging residents to adopt sustainable practices that benefit both our environment and economy."

Rep. Huffman emphasized the urgency of addressing water scarcity exacerbated by climate change-driven droughts: “Bold, innovative solutions across the board are necessary to tackle this crisis,” he stated. “One of the simplest and fastest things Congress can do is ensure the federal government is not an obstacle to local and state efforts to conserve water.”

Rep. Chu highlighted the importance of supporting home improvements that reduce water use amid increasing droughts in states like California: “Our federal tax code should encourage, not penalize, these investments,” she said.

The Water Conservation Rebate Tax Parity Act seeks to clarify that rebates offered by water utilities for conservation efforts are not taxable income but are intended to offset upfront consumer costs for public benefit. These rebates encourage residents to install systems such as "gray water" capture or purchase new water-efficient appliances, providing significant benefits to public health, the environment, and local economies.

This legislative effort aims to align the treatment of water conservation rebates with that of energy conservation rebates, which are currently non-taxable under IRS regulations.

Michelle Randall, Mayor of St. George, Utah, expressed gratitude towards Rep. Curtis for his leadership: “Fixing this IRS overreach is going to remove this tax penalty and allow more customers to take advantage of our grass removal rebate program.”

Kerry Stackpole, CEO of Plumbing Manufacturers International, supported the bill: “We applaud Representatives John Curtis and Jared Huffman for reintroducing this important bipartisan legislation.”

Dennis Rodoni, President of Marin County Board of Supervisors, echoed similar sentiments: “We fully support Congressman Huffman’s efforts to remove any roadblocks that might hinder California’s critical water conservation efforts.”

Steve Elie, Chair of the IEUA Community & Legislative Committee emphasized the role of conservation in maintaining a drought-resilient supply: “The Water Conservation Tax Parity Act helps incentivize more individuals to protect our water resources.”

Ron Burke, President and CEO of the Alliance for Water Efficiency noted: “This bill will make investing in water efficiency easier because it eliminates an unnecessary tax on households that receive incentives.”

Tom Dobbins, CEO of Association of Metropolitan Water Agencies expressed support stating: “Households can benefit from water conservation and efficiency incentives without receiving a new tax bill.”

Natasha Rankin, CEO of IA concluded: "By providing equal tax treatment for water conservation rebates, this legislation encourages widespread adoption of water-efficient technologies."

Full text of the legislation can be found here.