S. 4506: Advancing Water Reuse Act

The Advancing Water Reuse Act proposes changes to the U.S. Internal Revenue Code to encourage investment in water reuse projects by providing a tax credit. Here are the key features of the bill:

Investment Credit for Water Reuse Projects

• The act introduces a tax credit for qualifying water reuse projects, allowing taxpayers to receive a credit equal to 30% of their qualified investment in such projects for a taxable year.
• A qualifying water reuse project can include:
  • Installation, replacement, or modification of an onsite water recycling system in industrial, manufacturing, data center, or food processing facilities.
  • Replacement of freshwater usage with recycled water from municipal providers for producing goods or services.
  • Construction or expansion of municipal water recycling systems to obtain recycled water for production or services.

Definition of Qualified Investment

• Qualified investment refers to tangible property that is either constructed or acquired by the taxpayer and is placed in service during the taxable year.
• This property must be eligible for depreciation or amortization, meaning it is a capital asset that can be accounted for over time in terms of wear and tear or value decrease.

Special Rules for Property Transferred to Utilities

• If a taxpayer transfers qualified property to a utility, that property is still counted as a qualified investment for the taxpayer, allowing them to claim the credit even after the transfer.

Termination of Eligibility

• The bill specifies that to qualify for the tax credit, the project must be completed within 10 years after the enactment of the law.

Effective Date

• The provisions will apply to qualifying water reuse projects for which construction begins after the law is enacted.

Relevant Companies

• AWU - This company may invest in or implement water reuse technologies in its operations, potentially benefiting from the tax credits introduced by the bill.
• SGU - Similar to AWU, this utility company could see changes in how it interacts with its infrastructure, possibly benefiting from the proposed tax incentives for water recycling efforts.