S. 4506

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4506 Introduced in Senate (IS)]

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119th CONGRESS
2d Session
S. 4506

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

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

May 13, 2026

Mr. Lujan (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.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

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

SEC. 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:

``SEC. 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.
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