U.S. Sens. Alex Padilla (D-CA) and Dianne Feinstein (D-CA), and U.S. Reps. Jared Huffman (D-CA) and Judy Chu (D-CA) introduced legislation last week to provide tax relief for homeowners receiving water utility rebates for water conservation and water runoff management improvements.
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The Water Conservation Rebate Tax Parity Act would amend federal tax law, ensuring homeowners would not pay income tax when receiving water utility rebates for conservation initiatives.
“As California continues to experience severe drought, it’s important that we support homeowners who invest in technologies to reduce their water consumption, not penalize them with additional federal income taxes,” Padilla said. “The Water Conservation Rebate Tax Parity Act is a simple step to reduce water usage and encourage homeowners to take the initiative to conserve our limited water supply.”
The legislators maintain the measure would clarify the rebates are not taxable income but instead serve to defray consumer costs for public benefit.
“We need to do all we can to combat severe drought in California and across the West,” Feinstein said. “That’s why California issues rebates to homeowners who work to improve their homes’ water efficiency. Unfortunately, homeowners must pay income taxes on these rebates under current law. That needs to change so more Californians will invest in these critical water efficiency home improvements.”
Chu said with states like California in the midst of a historic drought, it is crucial Americans get help to make water-smart investments to reduce water use.
“I believe our federal tax code should encourage, not penalize, these investments,” she said. “This bill will remove the federal tax burden on water conservation rebates and help more Americans to lower their water use, reduce stormwater runoff, and help states preserve water resources.”