Saving Water Shouldn’t Cost Taxpayers at Tax Time 

By Ardy KASSAKHIAN

 In Southern California, water isn’t something we take for granted. Whether we’re in the middle of a drought or just waiting for the next one, conservation is a way of life. We’ve developed policies and built entire programs and systems around the idea that every drop matters. So it’s baffling – and frankly counterproductive – that the federal government still taxes people for doing the right thing: using less water. 

You read that correctly. If you use a rebate from your local water agency to install drought-tolerant landscaping, upgrade to a water-efficient toilet or invest in smart irrigation, the IRS considers that rebate taxable income. So while each of us tries to reduce pressure on our limited water resources, support state conservation goals and cut our water bill, the federal government is treating us like we’ve just picked up a profitable side gig.

This is why I support the Water Conservation Rebate Tax Parity Act (H.R. 1871/S. 857) – a commonsense, bipartisan bill that simply says: don’t tax water conservation rebates. It’s modeled after similar energy efficiency incentives, which the IRS doesn’t tax. If you install solar panels or a high-efficiency HVAC system, your rebate is tax-free. But if you replace your lawn with drought-friendly landscaping? Congratulations! Here’s a 1099 form.

As Glendale’s representative on the board of the Metropolitan Water District of Southern California, I’ve seen firsthand how vital water conservation is. Metropolitan supplies water to nearly 19 million people across six counties. That’s about one in 17 Americans. And much of that water comes from hundreds of miles away – from the Colorado River and Northern California. So the less we use, the better off we are. Every saved drop counts.

To encourage conservation, since 1990 Metropolitan has paid out over $900 million in rebates for things like turf replacement, efficient appliances and smart landscaping. And those investments work. Replacing just one square foot of turf with drought-tolerant plants can save up to 55 gallons of water per year. Multiply that across thousands of homes, and the impact is enormous.

Yet once that rebate hits $600 or more, the IRS gets involved – treating your efforts like taxable income. Imagine taxing someone for using a reusable water bottle or taking public transit to work. That’s the message we’re sending when we penalize people for being environmentally responsible.

  And while we’re making it harder to conserve water, energy rebates remain untaxed. That disparity makes no sense especially when both are incentives that are critical to our response to the climate crisis. Snowpack in the Sierras is unreliable. The Colorado River is shrinking. Reservoir levels are rising and dropping with greater fluctuation than the stock market. And still, we make it harder – not easier – for people to help.

That’s why I recently traveled to Washington, D.C. to advocate for this bill. I met with members of Congress alongside a coalition of water leaders and environmental advocates. We carried a simple message: conservation shouldn’t come with a tax bill.

This legislation isn’t controversial. It has bipartisan support, a small budget impact (less than $10 million per year) and aligns with every public message we send about the importance of conservation. It’s a smart fix to an unnecessary problem.

Southern Californians aren’t looking for handouts. We just don’t want to be penalized for doing our part. The federal government should be encouraging water conservation – not taxing it.

Congress should pass the Water Conservation Rebate Tax Parity Act. And let’s stop taxing common sense.

Glendale Councilmember Ardy Kassakhian is a member of the board of directors of the Metropolitan Water District of Southern California. The mission of the MWD is to provide its service area with adequate and reliable supplies of high-quality water to meet present and future needs in an environmentally and economically responsible way.