S. 4506

119 S4506 IS: Advancing Water Reuse Act
 U.S. Senate
 2026-05-13
 text/xml
 EN
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 II  119th CONGRESS  2d Session  S. 4506  IN THE SENATE OF THE UNITED STATES   May 13, 2026   Mr. Luján  (for himself and  Mrs. Britt ) 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 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—
(1)
In general
The term  qualifying water reuse project  means a project which—
(A)
installs, replaces, or modifies an onsite water recycling system within an industrial, manufacturing, data center, or food processing facility,
(B)
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 by the taxpayer, or
(C)
builds or expands a municipal water recycling system for the purpose of securing recycled water for the production of goods or provision of services.
(2)
Water recycling system
The term  water recycling system  means infrastructure needed for the production, storage, conveyance, and use of recycled water.
(3)
Recycled water
The term  recycled water  means former wastewater, including both industrial and municipal wastewater, that has been treated and cleaned for a specific beneficial use.
(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 qualified investment with respect to any qualifying water reuse project unless such project is placed in service not later than the date which is 10 years after the date of the enactment of this section.
 .
(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 qualifying water reuse projects (as defined in  section 48F  of the Internal Revenue Code of 1986, as added by this section) the construction of which begins after the date of the enactment of this Act.