The Advancing Water Reuse Act would create a new federal tax credit allowing businesses and utilities to claim a 30 percent investment credit for water reuse projects placed in service within ten years of the law's enactment. The credit applies to companies that install systems to recycle wastewater within industrial, manufacturing, data center, or food processing facilities, or that replace freshwater usage with recycled water from municipal providers or by building municipal recycling systems. This tax incentive is designed to encourage private investment in water infrastructure by reducing the cost of projects that treat and reuse wastewater for production and business purposes. The law includes a special provision allowing businesses that transfer water recycling property to utilities to still claim the credit themselves rather than allowing the utility to claim it. There is no specific funding authorization mentioned, but the credit would reduce federal tax revenue through foregone taxes from eligible projects initiated within the ten-year window following enactment.
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