S. 1464 – Water Conservation Tax Parity Act

AI-Generated Summary

Updated April 15, 2026 at 4:42 PM UTC

The Water Conservation Tax Parity Act would change the federal tax code so that subsidies for water‑saving upgrades and storm‑water management projects are treated the same way as energy‑conservation subsidies. It lets customers, residents, and property owners who receive these subsidies from public utilities, state or local governments, or storm‑water providers exclude the payments from taxable income. The bill also adds clear definitions for what counts as a water‑conservation or storm‑water‑management measure.

Key Provisions

Expands the existing income‑exclusion for utility‑provided energy‑conservation subsidies to also cover subsidies for water‑conservation measures and storm‑water‑management measures provided by public utilities, state or local governments, or storm‑water management providers.
Defines a “water conservation measure” as any installation or modification primarily designed to reduce water use or improve water‑demand management for a dwelling unit.
Defines a “storm water management measure” as any installation or modification primarily designed to reduce or manage storm‑water runoff for a dwelling unit.
Specifies that a “public utility” includes entities selling electricity, natural gas, or water, and adds a definition for “storm water management provider.”
States the changes apply only to subsidies received after January 1, 2015 and does not affect the tax treatment of earlier subsidies.

Legislative Activity

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1 earlier action

SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S3831)

Finance Committee

June 28, 2017

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SenateIntro Referral

Introduced in Senate

June 28, 2017

SenateIntro Referral

Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S3831)

Finance Committee

June 28, 2017

Floor Debate

2 members

What members said about S. 1464 on the floor

2 Democrats

Sen. Dianne FeinsteinD-CA · Jun 28, 2017

Mr. President, today Senators Heller, Bennet, Gardner, and I are introducing the Water Conservation Tax Parity Act. This bill would exempt the value of residential water conservation and storm water…

Mr. President, today Senators Heller, Bennet, Gardner, and I are introducing the Water Conservation Tax Parity Act. This bill would exempt the value of residential water conservation and storm water runoff management rebates from gross income calculations.

California and the western States have been facing a severe drought. Some public utilities, state and local governments, and water management providers offer programs to promote water conservation and storm water management by providing subsidies. These programs help stimulate responsible water use; however, residential participation is essential to their success.

For example, the Metropolitan Water District of Southern California has offered a rebate program to encourage residents to replace turf with more water-responsible landscapes. More than 23,000 households have benefited from the turf removal rebates, and the average rebate per household covers 1,500 square feet or about $3,000, which covers about half of the cost to the resident.

Section 136 of the Internal Revenue Code already exempts energy conservation rebates from inclusion in gross income. However, there is no Federal exemption for water conservation or storm water management measures, which may undermine incentives for participation in these programs. These programs are just as valuable as energy conservation programs and should be treated equally in the tax code. This bill would simply exempt water conservation and storm water management rebates from being included in gross income and would be retroactive to 2015. This would maintain the important incentives for resident participation in critical water conservation measures.

This bill is supported by a coalition of organizations and public utilities, including the Western Urban Water Coalition, Alliance for Water Efficiency, American Water Works Association, National Association of Water Companies, U.S. Water Alliance, Association of Water Agencies, WaterNow Alliance, Western Coalition of Arid States, and National Water Resources Association. This bill is crucial to ensuring residents continue participating in water conservation and storm water management programs.

Mr. President, I strongly urge my colleagues to support this legislation and am hopeful that this Congress will move it forward.

Thank you. I yield the floor.

Sen. Dianne FeinsteinD-CA · Jun 28, 2017

Mr. President, today Senators Heller, Bennet, Gardner, and I are introducing the Water Conservation Tax Parity Act. This bill would exempt the value of residential water conservation and storm water…

Mr. President, today Senators Heller, Bennet, Gardner, and I are introducing the Water Conservation Tax Parity Act. This bill would exempt the value of residential water conservation and storm water runoff management rebates from gross income calculations.

California and the western States have been facing a severe drought. Some public utilities, state and local governments, and water management providers offer programs to promote water conservation and storm water management by providing subsidies. These programs help stimulate responsible water use; however, residential participation is essential to their success.

For example, the Metropolitan Water District of Southern California has offered a rebate program to encourage residents to replace turf with more water-responsible landscapes. More than 23,000 households have benefited from the turf removal rebates, and the average rebate per household covers 1,500 square feet or about $3,000, which covers about half of the cost to the resident.

Section 136 of the Internal Revenue Code already exempts energy conservation rebates from inclusion in gross income. However, there is no Federal exemption for water conservation or storm water management measures, which may undermine incentives for participation in these programs. These programs are just as valuable as energy conservation programs and should be treated equally in the tax code. This bill would simply exempt water conservation and storm water management rebates from being included in gross income and would be retroactive to 2015. This would maintain the important incentives for resident participation in critical water conservation measures.

This bill is supported by a coalition of organizations and public utilities, including the Western Urban Water Coalition, Alliance for Water Efficiency, American Water Works Association, National Association of Water Companies, U.S. Water Alliance, Association of Water Agencies, WaterNow Alliance, Western Coalition of Arid States, and National Water Resources Association. This bill is crucial to ensuring residents continue participating in water conservation and storm water management programs.

Mr. President, I strongly urge my colleagues to support this legislation and am hopeful that this Congress will move it forward.

Thank you. I yield the floor.

Sen. Richard J. DurbinD-IL · Jun 28, 2017

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Bill Text

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Introduced in SenateIssued June 28, 2017

II

115th CONGRESS

1st Session

S. 1464

IN THE SENATE OF THE UNITED STATES

June 28, 2017

Mrs. Feinstein (for herself, Mr. Heller, Mr. Bennet, and Mr. Gardner) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to expand the exclusion for energy conservation subsidies provided by public utilities to include subsidies provided by public utilities and State and local governments for water conservation and storm water management.

1.

Short title

This Act may be cited as the Water Conservation Tax Parity Act.

2.

Modifications to income exclusion for conservation subsidies

(a)

In general

Subsection (a) of section 136 of the Internal Revenue Code of 1986 is amended—

(1)

by striking any subsidy provided and inserting

any subsidy—

(1)

provided

;

(2)

by striking the period at the end and inserting a comma; and

(3)

by adding at the end the following new paragraphs:

(2)

provided (directly or indirectly) by a public utility to a customer, or by a State or local government to a resident of such State or locality, for the purchase or installation of any water conservation measure, or

(3)

provided (directly or indirectly) by a storm water management provider to a customer, or by a State or local government to a resident of such State or locality, for the purchase or installation of any storm water management measure.

.

(b)

Conforming amendments

(1)

Definition of water conservation measure and storm water management measure

Section 136(c) of the Internal Revenue Code of 1986 is amended—

(A)

by striking Energy conservation measure in the heading thereof and inserting Definitions;

(B)

by striking In general in the heading of paragraph (1) and inserting Energy conservation measure; and

(C)

by redesignating paragraph (2) as paragraph (4) and by inserting after paragraph (1) the following:

(2)

Water conservation measure

For purposes of this section, the term water conservation measure means any installation or modification primarily designed to reduce consumption of water or to improve the management of water demand with respect to a dwelling unit.

(3)

Storm water management measure

For purposes of this section, the term storm water management measure means any installation or modification of property primarily designed to reduce or manage amounts of storm water with respect to a dwelling unit.

.

(2)

Definition of public utility

Section 136(c)(4) of such Code (as redesignated by paragraph (1)(C)) is amended by striking subparagraph (B) and inserting the following:

(B)

Public utility

The term public utility means a person engaged in the sale of electricity, natural gas, or water to residential, commercial, or industrial customers for use by such customers.

(C)

Storm water management provider

The term storm water management provider means a person engaged in the provision of storm water management measures to the public.

(D)

Person

For purposes of subparagraphs (B) and (C), the term person includes the Federal Government, a State or local government or any political subdivision thereof, or any instrumentality of any of the foregoing.

.

(3)

Clerical amendments

(A)

The heading of section 136 of such Code is amended—

(i)

by inserting and water after energy; and

(ii)

by striking provided by public utilities.

(B)

The item relating to section 136 in the table of sections of part III of subchapter B of chapter 1 of such Code is amended—

(i)

by inserting and water after energy; and

(ii)

by striking provided by public utilities.

(c)

Effective date

The amendments made by this section shall apply to amounts received after January 1, 2015.

(d)

No inference

Nothing in this Act or the amendments made by this Act shall be construed to create any inference with respect to the proper tax treatment of any subsidy received directly or indirectly from a public utility, a storm water management provider, or a State or local government for any water conservation measure or storm water management measure before January 1, 2015.