Qualifying water reuse project credit

(a) In general Subpart E of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after section 48H the following new section: 48I. Qualifying water reuse project credit (a) In general For purposes of section 46, the qualifying water reuse project credit for any taxable year is an amount equal to 30 percent of the qualified investment for such taxable year with respect to any qualifying water reuse project of the taxpayer. (b) Qualified investment (1) In general For purposes of subsection (a), the qualified investment with respect to any qualifying water reuse project for any taxable year is the basis of qualified property placed in service by the taxpayer during such taxable year which is part of such qualifying water reuse project. (2) Qualified property For purposes of this subsection, the term qualified property means property— (A) which is tangible property, (B) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and (C) which is— (i) constructed, reconstructed, or erected by the taxpayer, or (ii) acquired by the taxpayer if the original use of such property commences with the taxpayer. (3) Certain qualified progress expenditures rules made applicable Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section. (c) Qualifying water reuse project For purposes of this section— (1) In general The term qualifying water reuse project means a project which— (A) installs, replaces, or modifies an onsite water recycling system within an industrial, manufacturing, data center, or food processing facility, (B) replaces the use of freshwater, such as groundwater, with recycled water from a municipal water provider for the production of goods or provision of services, or (C) builds or expands a municipal water recycling system for the purpose of securing recycled water for the production of goods or provision of services. (2) Prevailing wage and apprenticeship requirements Such term shall not include any project unless such project meets the requirements of paragraph (7) and (8) of section 45(b). (d) Special rule for certain property transferred to utilities (1) In general In the case of any qualified transfer property transferred from a person to a utility— (A) such property shall be treated as qualified property with respect to such person, (B) such person shall be treated as having placed such property in service at the time of such transfer, (C) the basis of such person in such property which is taken into account under subsection (b)(1) shall be the basis of such person in such property at the time of such transfer, and (D) such property shall not be taken into account for purposes of determining any credit allowed under this section to such utility. (2) Qualified transfer property For purposes of this subsection, the term qualified transfer property means property transferred from a person to a utility if— (A) such property is qualified property with respect to such utility, and (B) such person and such utility enter into a binding written agreement under which such person is treated as eligible for the credit allowed under this section with respect to such property in lieu of such utility. (e) Termination This section shall not apply to any property the construction of which begins after December 31, 2032.. (b) Part of investment credit Section 46, as amended by the preceding provisions of this Act, is amended by striking and at the end of paragraph (9), by striking the period at the end of paragraph (10) and inserting, and, and by adding at the end the following new paragraph: (11) the qualifying water reuse project credit.. (c) Clerical amendment The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after the item relating to section 48H the following new item: Sec. 48I. Qualifying water reuse project credit.. (d) Effective date The amendments made by this section shall apply to periods after the date of the enactment of this section under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the date of the enactment of the Revenue Reconciliation Act of 1990).