U.S. Representative Jared Huffman and U.S. Representative Blake Moore reintroduced the Water Conservation Rebate Tax Parity Act.
A bill was introduced in the U.S. House of Representatives that would create a federal home hardening program and exempt it from federal taxes for grants that homeowners receive to undertake these projects.
This bipartisan legislation would amend federal tax law to exempt homeowners from paying income tax on rebates received from water utilities for water conservation and runoff management improvements.
The bill would require the president to create a grant program focusing on properties in high-risk areas. The legislation also includes provisions for defining eligible disaster areas and creating mitigation plans.
If the program goes into effect, it will limit grant amounts to $10,000 for qualifying projects. The bill spells out a litany of qualifying projects, which range from installing a standby generator system to enhancing a roof’s resistance to impact and fire damage.
Individuals earning $250,000 or more would be barred from participating in the program, according to the bill. Joint filers earning more than $500,000 annually would also be barred.
The bill encourages homeowners to invest in water-saving and flood-prevention improvements by ensuring they are not penalized with unexpected tax burdens.
Companion legislation in the U.S. Senate is being introduced by U.S. Senators Alex Padilla (D-CA), John Hickenlooper (D-CO), and John Curtis (R-UT).
Public utilities and local governments nationwide are expanding rebates and incentives for homeowners who invest in water conservation and stormwater management. These programs aim to cut water use, reduce runoff, and ease pressure on public infrastructure.
Upgrading plumbing, installing graywater systems, and using high-efficiency appliances improve public health, support the environment, and benefit local economies. While these rebates help both residents and utilities, they remain taxable under federal law. This classification discourages participation in conservation efforts.
The Water Conservation Rebate Tax Parity Act seeks to change that. It clarifies that these incentives, which are increasing in scope and value, should not count as taxable income but instead help offset upfront costs for public benefit.
Worsening climate change has triggered more severe and frequent droughts throughout California, and our communities and ecosystems are paying the price.
Congressman Jared Huffman
“We need bold, innovative solutions to get this crisis under control immediately. The Water Conservation Rebate Tax Parity Act is one of the simplest and fastest ways to both reduce this water use and help California preserve its water supply, while also protecting our taxpayers from bearing the brunt of these costs. This legislation offers a win-win solution – enabling a cost-efficient transition to water-saving technologies locally while also protecting precious resources statewide,” said Congressman Jared Huffman.
“Utahns know firsthand the importance of both water conservation and smart tax policy,” said Congressman Blake Moore.
This bill combines these two efforts by eliminating unnecessary tax burdens on homeowners who invest in water-efficient solutions, helping families keep more of their hard-earned dollars while promoting sustainability. Americans deserve a tax code that values responsible choices, and this bill is a commonsense step in the right direction.
“As climate change brings more frequent and severe droughts to states like California, it is crucial that Americans get support making home improvements that reduce their water use. As a Member of the Ways and Means Committee, I believe our federal tax code should encourage, not penalize, these investments. I’m joining Reps. Huffman and Moore, and Sens. Padilla and Curtis, in reintroducing the Water Conservation Rebate Tax Parity Act to remove the federal tax burden on water conservation rebates, which will help more Americans reduce their water use and help states like California preserve our precious water resources,” said Rep. Chu.
“For Californians, conserving water is a way of life — and we know the importance of staying prepared for the next major drought,” said Senator Alex Padilla. “Saving water means saving money on your water bills, which is why water utilities throughout the state offer rebates for more efficient water fixtures or drought-tolerant landscaping. We should incentivize homeowners to invest in technologies that reduce their water consumption, not penalize them with additional federal income taxes.”
Due to Utah’s dry climate, water conservation is essential to preserving our way of life. While households and communities have made significant strides in improving water efficiency, the federal tax code has yet to catch up in supporting these investments
Senator John Curtis
“By removing taxes on rebates for water-saving home upgrades, our bill rewards Utahns for adopting sustainable practices that benefit both our environment and economy,” said Senator John Curtis.
“Droughts don’t just disappear. We need to make the most of every drop,” said Senator John Hickenlooper. “Homeowners need to conserve their water to make us more drought resilient.”
