I 
119TH CONGRESS 
1ST SESSION H. R. 2940 
To amend the Internal Revenue Code of 1986 to allow an investment credit 
for certain water reuse projects. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 17, 2025 
Mr. LAHOOD (for himself, Ms. SA´NCHEZ, Ms. TENNEY, and Mr. SCHNEIDER) 
introduced the following bill; which was referred to the Committee on 
Ways and Means 
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 Representa-
tives 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 sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 48E the fol-
lowing new section: 
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‘‘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 invest-
ment 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 allow-
able, 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. 
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‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI-
TURES 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, the term ‘qualifying water reuse 
project’ means a project which— 
‘‘(1) installs, replaces, or modifies an onsite 
water recycling system within an industrial, manu-
facturing, data center, or food processing facility, 
‘‘(2) replaces the use of freshwater, such as 
groundwater, with recycled water from a municipal 
water provider for the production of goods or provi-
sion of services, or 
‘‘(3) builds or expands a municipal water recy-
cling system for the purpose of securing recycled 
water for the production of goods or provision of 
services. 
‘‘(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— 
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‘‘(A) such property shall be treated as 
qualified property with respect to such person, 
‘‘(B) such person shall be treated as hav-
ing placed such property in service at the time 
of such transfer, 
‘‘(C) the basis of such person in such prop-
erty which is taken into account under sub-
section (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. 
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‘‘(e) TERMINATION.—This section shall not apply to 
any property the construction of which begins after De-
cember 31, 2032.’’. 
(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 para-
graph (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 relat-
ing 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 periods after the date of the 
enactment of this section under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 
(as in effect on the date of the enactment of the Revenue 
Reconciliation Act of 1990). 
Æ 
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