Advancing Water Reuse Act

This bill creates a new federal tax credit for businesses that invest in water reuse projects. It adds a new section to the Internal Revenue Code allowing a credit equal to 30% of the investment in qualified property for a qualifying water reuse project.

Sec. 2, Qualifying water reuse project credit: The bill establishes a new tax credit under the investment credit category. The credit is 30% of the qualified investment in a qualifying water reuse project. Qualified investment is the basis of tangible, depreciable property that the taxpayer constructs or acquires for original use. A qualifying water reuse project includes installing or modifying an onsite water recycling system at an industrial, manufacturing, data center, or food processing facility; replacing freshwater use with recycled water from a municipal provider for production; or building or expanding a municipal water recycling system for production. Recycled water is treated wastewater for a beneficial use. A special rule allows a person to transfer property to a utility and still claim the credit if they have a written agreement. The credit only applies to projects placed in service within 10 years after the bill's enactment. The bill also updates the list of investment credits and the tax code's table of sections. The credit applies to projects that begin construction after the bill is enacted.