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H.R. 2940House119th Congress (2025-2027)In Committee

Advancing Water Reuse Act

Sponsored by Darin LaHoodRep. Darin LaHood (R-IL)
Introduced April 17, 2025

AI-Generated Summary

Updated November 24, 2025 at 1:02 AM UTC

The Advancing Water Reuse Act adds a new section to the Internal Revenue Code that gives businesses and municipalities a 30 % investment tax credit for projects that install or expand water‑recycling systems. The credit applies to the cost of qualifying tangible property placed in service for such projects, encouraging the replacement of fresh water with recycled water in industrial, manufacturing, data‑center, food‑processing, and municipal settings. A special rule lets the original owner claim the credit when the property is transferred to a utility, and the credit expires for projects starting after the end of 2032.

Key Provisions

  • Creates a new tax credit worth 30 % of the qualified investment in eligible water‑reuse projects.
  • Qualified investment is the cost basis of tangible property placed in service that is used for the water‑reuse project.
  • Eligible projects include: (1) installing, replacing, or modifying onsite water‑recycling systems in industrial, manufacturing, data‑center, or food‑processing facilities; (2) swapping fresh water (e.g., groundwater) for recycled municipal water in production or service operations; or (3) building or expanding a municipal water‑recycling system to supply recycled water for such uses.
  • If a taxpayer transfers qualified property to a utility, the original owner can claim the credit (based on their basis at transfer) while the utility cannot claim a credit for that property.
  • The credit does not apply to any property whose construction begins after December 31, 2032, and it takes effect for tax periods after the law’s enactment.

Legislative Activity

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1 earlier action
HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

April 17, 2025

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HouseIntro Referral

Introduced in House

April 17, 2025

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

April 17, 2025

Bill Text

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Introduced in HouseIssued April 17, 2025

I

119th CONGRESS

1st Session

H. R. 2940

IN THE HOUSE OF REPRESENTATIVES

April 17, 2025

Mr. LaHood (for himself, Ms. Sánchez, Ms. Tenney, and Mr. Schneider) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow an investment credit for certain water reuse projects.

1.

Short title

This Act may be cited as the Advancing Water Reuse Act.

2.

Qualifying water reuse project credit

(a)

In general

Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48E the following new section:

48F.

Qualifying water reuse project credit

(a)

In general

For purposes of section 46, the qualifying water reuse project credit for any taxable year is an amount equal to 30 percent of the qualified investment for such taxable year with respect to any qualifying water reuse project of the taxpayer.

(b)

Qualified investment

(1)

In general

For purposes of subsection (a), the qualified investment with respect to any qualifying water reuse project for any taxable year is the basis of qualified property placed in service by the taxpayer during such taxable year which is part of such qualifying water reuse project.

(2)

Qualified property

For purposes of this subsection, the term qualified property means property—

(A)

which is tangible property,

(B)

with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and

(C)

which is—

(i)

constructed, reconstructed, or erected by the taxpayer, or

(ii)

acquired by the taxpayer if the original use of such property commences with the taxpayer.

(3)

Certain qualified progress expenditures rules made applicable

Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.

(c)

Qualifying water reuse project

For purposes of this section, the term qualifying water reuse project means a project which—

(1)

installs, replaces, or modifies an onsite water recycling system within an industrial, manufacturing, data center, or food processing facility,

(2)

replaces the use of freshwater, such as groundwater, with recycled water from a municipal water provider for the production of goods or provision of services, or

(3)

builds or expands a municipal water recycling system for the purpose of securing recycled water for the production of goods or provision of services.

(d)

Special rule for certain property transferred to utilities

(1)

In general

In the case of any qualified transfer property transferred from a person to a utility—

(A)

such property shall be treated as qualified property with respect to such person,

(B)

such person shall be treated as having placed such property in service at the time of such transfer,

(C)

the basis of such person in such property which is taken into account under subsection (b)(1) shall be the basis of such person in such property at the time of such transfer, and

(D)

such property shall not be taken into account for purposes of determining any credit allowed under this section to such utility.

(2)

Qualified transfer property

For purposes of this subsection, the term qualified transfer property means property transferred from a person to a utility if—

(A)

such property is qualified property with respect to such utility, and

(B)

such person and such utility enter into a binding written agreement under which such person is treated as eligible for the credit allowed under this section with respect to such property in lieu of such utility.

(e)

Termination

This section shall not apply to any property the construction of which begins after December 31, 2032.

.

(b)

Part of investment credit

Section 46 of such Code is amended by striking and at the end of paragraph (6), by striking the period at the end of paragraph (7) and inserting , and, and by adding at the end the following new paragraph:

(8)

the qualifying water reuse project credit.

.

(c)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 48E the following new item:

Sec. 48F. Qualifying water reuse project credit.

.

(d)

Effective date

The amendments made by this section shall apply to periods after the date of the enactment of this section under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the date of the enactment of the Revenue Reconciliation Act of 1990).