II 

118TH CONGRESS 

2D SESSION S. 4897 

To amend the Internal Revenue Code of 1986 to expand the exclusion for 

certain conservation subsidies to include subsidies for water conservation 

or efficiency measures, storm water management measures, and wastewater management measures. 

IN THE SENATE OF THE UNITED STATES 

JULY 31, 2024 

Ms. BUTLER (for herself, Mr. PADILLA, and Mr. HICKENLOOPER) 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 expand 

the exclusion for certain conservation subsidies to include 

subsidies for water conservation or efficiency measures, 

storm water management measures, and wastewater 

management measures. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Water Conservation 

5 Rebate Tax Parity Act’’. 


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1 SEC. 2. MODIFICATIONS TO INCOME EXCLUSION FOR CON2 SERVATION SUBSIDIES. 

3 (a) IN GENERAL.—Subsection (a) of section 136 of 

4 the Internal Revenue Code of 1986 is amended— 

5 (1) by striking ‘‘any subsidy provided’’ and in6 serting ‘‘any subsidy— 

7 ‘‘(1) provided’’, 

8 (2) by striking the period at the end and insert9 ing a comma, and 

10 (3) by adding at the end the following new 

11 paragraphs: 

12 ‘‘(2) provided (directly or indirectly) by a public 

13 utility to a customer, or by a State or local govern14 ment to a resident of such State or locality, for the 

15 purchase or installation of any water conservation or 

16 efficiency measure, 

17 ‘‘(3) provided (directly or indirectly) by a storm 

18 water management provider to a customer, or by a 

19 State or local government to a resident of such State 

20 or locality, for the purchase or installation of any 

21 storm water management measure, or 

22 ‘‘(4) provided (directly or indirectly) by a State 

23 or local government to a resident of such State or 

24 locality for the purchase or installation of any waste25 water management measure, but only if such measVerDate Sep 11 2014 01:11 Aug 29, 2024 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4897.IS S4897

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1 ure is with respect to the taxpayer’s principal resi2 dence.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) DEFINITION OF WATER CONSERVATION OR

5 EFFICIENCY MEASURE AND STORM WATER MANAGE6 MENT MEASURE.—Section 136(c) of the Internal 

7 Revenue Code of 1986 is amended— 

8 (A) by striking ‘‘ENERGY CONSERVATION

9 MEASURE’’ in the heading thereof and inserting 

10 ‘‘DEFINITIONS’’, 

11 (B) by striking ‘‘IN GENERAL’’ in the 

12 heading of paragraph (1) and inserting ‘‘EN13 ERGY CONSERVATION MEASURE’’, and 

14 (C) by redesignating paragraph (2) as 

15 paragraph (5) and by inserting after paragraph 

16 (1) the following: 

17 ‘‘(2) WATER CONSERVATION OR EFFICIENCY

18 MEASURE.—For purposes of this section, the term 

19 ‘water conservation or efficiency measure’ means any 

20 evaluation of water use, or any installation or modi21 fication of property, the primary purpose of which is 

22 to reduce consumption of water or to improve the 

23 management of water demand with respect to one or 

24 more dwelling units. 


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1 ‘‘(3) STORM WATER MANAGEMENT MEASURE.— 

2 For purposes of this section, the term ‘storm water 

3 management measure’ means any installation or 

4 modification of property primarily designed to re5 duce or manage amounts of storm water with re6 spect to one or more dwelling units, including an in7 stallation or modification to prevent or reduce the 

8 impacts of storm water-caused flooding to such 

9 property. 

10 ‘‘(4) WASTEWATER MANAGEMENT MEASURE.— 

11 For purposes of this section, the term ‘wastewater 

12 management measure’ means any installation or 

13 modification of property primarily designed to man14 age wastewater (including septic tanks and cess15 pools) with respect to one or more dwelling units.’’. 

16 (2) DEFINITION OF PUBLIC UTILITY.—Section 

17 136(c)(5) of such Code (as redesignated by para18 graph (1)(C)) is amended by striking subparagraph 

19 (B) and inserting the following: 

20 ‘‘(B) PUBLIC UTILITY.—The term ‘public 

21 utility’ means a person engaged in the sale of 

22 electricity, natural gas, or water to residential, 

23 commercial, or industrial customers for use by 

24 such customers. 


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1 ‘‘(C) STORM WATER MANAGEMENT PRO2 VIDER.—The term ‘storm water management 

3 provider’ means a person engaged in the provi4 sion of storm water management measures to 

5 the public. 

6 ‘‘(D) PERSON.—For purposes of subpara7 graphs (B) and (C), the term ‘person’ includes 

8 the Federal Government, a State or local gov9 ernment or any political subdivision thereof, or 

10 any instrumentality of any of the foregoing.’’. 

11 (3) CLERICAL AMENDMENTS.— 

12 (A) The heading of section 136 of such 

13 Code is amended— 

14 (i) by inserting ‘‘AND WATER’’ after 

15 ‘‘ENERGY’’, and 

16 (ii) by striking ‘‘PROVIDED BY PUB17 LIC UTILITIES’’. 

18 (B) The item relating to section 136 in the 

19 table of sections of part III of subchapter B of 

20 chapter 1 of such Code is amended— 

21 (i) by inserting ‘‘and water’’ after 

22 ‘‘energy’’, and 

23 (ii) by striking ‘‘provided by public 

24 utilities’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to amounts received after Decem3 ber 31, 2021. 

4 (d) NO INFERENCE.—Nothing in this Act or the 

5 amendments made by this Act shall be construed to create 

6 any inference with respect to the proper tax treatment of 

7 any subsidy received directly or indirectly from a public 

8 utility, a storm water management provider, or a State 

9 or local government for any water conservation or effi10 ciency measure, storm water management measure, or 

11 wastewater management measure before January 1, 2022. 

Æ 


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