Congress offers $30 tax break per $100 spent on corporate water recycling
S. 4506 — Advancing Water Reuse Act · Filed by Ben Luján (D-NM) · 3 cosponsors · Introduced May 13, 2026 · Referred to committee
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What it does
This bill creates a federal tax credit worth 30% of the cost of water reuse infrastructure—systems that recycle wastewater for industrial, manufacturing, data center, or food processing use instead of drawing fresh groundwater. The credit applies to companies that build or upgrade recycling systems, replace freshwater with recycled water, or transfer such property to utilities under a binding agreement. The credit expires 10 years after enactment.
Why we flagged it
The bill's operative mechanism is a 30% investment tax credit—a direct federal subsidy—flowing to corporations and industrial facilities that adopt water recycling. While framed as environmental policy, the primary effect is to reduce the after-tax cost of capital investment for large industrial users, not to mandate or broadly incentivize water conservation.
What the text implies
- The 'special rule for certain property transferred to utilities' (Section 48F(d)) allows a corporation to claim the 30% credit even when it transfers the recycling system to a utility, effectively allowing the corporation to capture the tax benefit while the utility owns and operates the asset—a potential double-subsidy structure.
- The credit applies to 'data center' facilities with no efficiency or public-benefit threshold, meaning a data center in a water-rich region could claim the credit for recycling systems that provide minimal conservation benefit.
The full analysis lists 4 implications of this text.
Who stands to gain
large industrial manufacturers; data center operators; food processing companies