Water and Sewer Exemption Restored in Senate Bipartisan Infrastructure Bill
The Senate bipartisan infrastructure bill includes a provision sought by NAHB to restore an exemption for water and sewer contributions in aid of construction (CIAC). If enacted into law, this would be effective for contributions made after Dec. 31, 2020.
As part of the Tax Cuts and Jobs Act enacted in 2018, Congress eliminated an exemption for water and sewer CIAC, making such contributions taxable if the utility is a privately-owned, for-profit entity.
As a result, in areas served by a corporate, for-profit water utility, when a builder installs new water or sewer infrastructure to support additional housing — at no cost to the existing residents — that infrastructure is taxed by the federal government. 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.
Latest from NAHBNow
May 27, 2025
Home Builders Fund Helps Rebuild Homes After Natural DisastersThis year, natural disasters have once again left a trail of destruction across the country. In response, the HBIDRF has stood alongside local and state HBAs as they support their communities and members in times of crisis.
May 23, 2025
Florida Builders and Local Leaders Team Up to Create Lasting Affordable HousingAn innovative partnership between the HBA of West Florida and local lawmakers is offering a blueprint for how communities across the U.S. can create lasting, affordable housing.
Latest Economic News
May 27, 2025
Building Material Price Growth Minimal in AprilPrices for inputs to new residential construction—excluding capital investment, labor, and imports—fell 0.4% in April, following a (revised) increase of 0.8% in March. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics.
May 26, 2025
State-Level Employment Situation: April 2025Nonfarm payroll employment increased in 40 states in April compared to the previous month, while it decreased in 10 states and the District of Columbia. According to the Bureau of Labor Statistics, nationwide total nonfarm payroll employment increased by 177,000 in April following a gain of 185,000 jobs in March.
May 23, 2025
Volatile Spring Selling Season ContinuesThe Census estimate of new home sales posted an unexpected gain in April even as builders and consumers continue to deal with economic uncertainty, elevated interest rates and rising building material costs.