New federal legislation could provide relief for homeowners in drought-ravaged parts of the country. It proposes that water utilities’ rebates for saving water on private property be non-taxable.

A bipartisan group from the House of Representatives, led by Rep. Jared Huffman (D-CA), introduced the legislation to clarify that rebates provided by water utilities for water conservation and green infrastructure improvements on private property are not taxable.

Clarifying that these rebates are tax exempt makes a lot of sense, says NRDC blogger Alisa Valderrama, an expert on water and green infrastructure investments.

If water conservation and green infrastructure rebate payments are considered taxable income to the property owners who receive them, it significantly deters participation in these programs, making it harder for utilities to cost-effectively manage stormwater and protect drinking water sources.

That's why this legislation so important. While the net revenue impact would be negligible, the larger benefits to our communities and our waterways could be significant. As one of the co-sponsors, Rep. Dana Rohrabacher (R-CA), noted, "Taxpayers should not be penalized for doing the right thing."

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