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Assemblymember Holden’s Water Conservation Tax Relief Legislation Helps Keep California Out of Drought

For immediate release:

Sacramento, CA – Assemblymember Chris Holden introduced AB 533 today which incentivizes participation in water efficiency and storm water runoff improvement programs.


“Water conservation shouldn’t be taxed,” said Assemblymember Chris Holden. “We must do all we can to incentivize Californians to increase water efficiency in a state that is prone to chronic droughts.”


Assembly Bill 533 exempts any rebates, vouchers, or other financial incentives issued by a local water agency or supplier for expenses incurred to participate in a water efficiency or storm water improvement program from state or corporate income tax. 


California currently has a patchwork of tax exemptions for different water conservation programs, including water efficient appliances and turf replacement, some of which are set to expire shortly.  AB 533 will incentivize and encourage participation in water agency conservation programs designed to increase water use efficiency and improve storm water management throughout California.


“California’s water shortage is a structural issue that we must do more to address,” said Senator Wiener (D- San Francisco) a co-author of AB 533. “As our droughts grow longer and more intense, it is crucial for the state to make it easier and more affordable to participate in water efficiency and storm water runoff programs.”


“AB 533 provides clarity and certainty for water agencies that they can provide incentives to local business and residential consumers that make sense for their communities without the burden of issuing 1099s or concerns that their consumers will be discouraged from participating in these important programs by an additional tax burden,” said Cynthia Koehler, Executive Director of WaterNow Alliance which is co-sponsoring the bill.


“Rebate programs are a cost-effective way to increase water efficiency and support efforts to adapt to a changing climate. Penalizing people with a tax bill for doing the right thing discourages participation in the very programs we need to meet our conservation objectives,” said Jeff Kightlinger, General Manager of the Metropolitan Water District of Southern California.


“Encouraging residents to reduce water usage by planting sustainable water efficient landscapes, installing "gray water" capture systems, or purchasing new water-efficient appliances can provide significant water savings.” said Mary Ann Dickinson, Executive Director of California Water Efficiency Partnership. “As local water agencies scale up their water conservation programs to meet new statewide water efficiency mandates, AB 533 will support these efforts by removing the barrier of state income taxation.”