The Water and Agriculture Tax Reform Act of 2023 modifies federal tax rules to encourage water leasing and transfers among irrigation and water management organizations. Specifically, it allows mutual ditch and irrigation companies to engage in water sales, leases, and exchanges without those transactions counting as taxable income, as long as the proceeds are used for operations, maintenance, capital improvements, or water delivery infrastructure. The bill also permits these water organizations to structure their corporate voting rights proportionally to share ownership rather than using a one-vote-per-share model. The legislation affects agricultural water cooperatives and irrigation companies primarily in western states and takes effect for tax years beginning after the bill's enactment, with no specific funding allocations mentioned since the changes operate through the tax code.
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