White Paper on Fed Tax Credit for WaterSense Homes for Builders Released
Americans need more homes that are affordable to buy initially and own in the long run now more than ever before. However, water resources are being stretched thin at the same time, all the while water utility bills are increasing faster than inflation.
To transform the new home market to greater energy efficiency levels and ensure affordable energy bills for future homeowners, he federal government already provides tax credits for ENERGY STAR Homes under the tax code (26 USC § 45L). Known as 45L, this tax credit enables builders to increase the energy efficiency of their homes while limiting any increase in the upfront costs to homeowners.
According to the Alliance for Water Efficiency (AWE), AWE, the Residential Energy Services Network (RESNET), and their respective members see an opportunity to further meet the need for affordable and efficient new housing by expanding the 45L tax credit to include water efficiency through the WaterSense Homes program. Much like ENERGY STAR Homes, the WaterSense Homes program is a voluntary federal program that recognizes homes that are at least 30 percent more water-efficient than typical new construction, use WaterSense-labeled plumbing products, and are free of water leaks. WaterSense recently estimated that labeled homes could save between $388 and $978 annually on utility bills compared to typical new construction.
This policy white paper outlines AWE’s and RESNET’s proposal that Congress Amend Section 45L (or create a new Section 45M) of the tax code to include a $2000 tax credit for builders of new WaterSense-labeled homes through December 31, 2032.
