The Water and Agriculture Tax Reform Act of 2023 modifies federal tax rules to encourage water leasing and transfers by exempting certain water-related income from taxation for mutual ditch and irrigation companies. Under the bill, these organizations can receive income from selling, leasing, or exchanging water rights and interests without it counting against their tax-exempt status, as long as the money is used for operations, maintenance, capital improvements, or constructing water delivery systems. The legislation also allows these irrigation companies to structure their voting rights based on share ownership rather than one-vote-per-member rules. The changes apply to tax years beginning after the bill is enacted, with no specific funding mechanism or implementation timeline beyond that effective date.
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