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The National Association of Home Builders sought to restore an exemption for water and sewer contributions in aid of construction in the Senate bipartisan infrastructure bill. Congress eliminated this exemption as part of the Tax Cuts and Jobs Act in 2018, making contributions to water and sewer infrastructure taxable if the utility is privately owned and for profit. If a builder constructs new infrastructure to support new housing in the areas with corporate, for-profit water utilities, the federal government taxes the infrastructure.
In some states, affected utilities were required to pass this tax liability to the developer, resulting in CIAC surcharges as high as 40%.
NAHB has been working with a bipartisan group of senators to restore the water and sewer exemption. In June, Sens. Jeanne Shaheen (D-N.H.) and Lisa Murkowski (R-Alaska) introduced legislation (S. 1997) to do so. This bill formed the basis for the restoration of the exemption in the bipartisan infrastructure bill, and NAHB is grateful for their leadership on this issue.
The Senate is working to pass this bill in the coming days, but House action will likely be delayed until the fall.
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