A bipartisan group of U.S. Representatives introduced a new bill this week aimed at ending a confusing tax burden for homeowners who receive government help to fix their wastewater systems.
The legislation, titled the “Septic Exclusion for Property Owners through Tax-free Infrastructure Compensation Act”—or the SEPTIC Act—would ensure that state and local grants for septic repairs are not treated as taxable income by the IRS.
The bill was brought forward by Representatives Greg Steube (R-Fla.), Tom Suozzi (D-N.Y.), Aaron Bean (R-Fla.), and Gus Bilirakis (R-Fla.). It specifically targets a loophole where financial aid meant to protect the environment and public health can trigger an unexpected tax bill for families.
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“Families shouldn’t be taxed for making critical upgrades that protect their health, water quality and their communities,” Rep. Steube said. “Florida represents 12% of the United States’ septic systems. Failing septic systems pose serious risk to our water supply and public health.”
Under current federal law, it is often unclear whether subsidies provided by local governments to repair failing tanks or connect homes to city sewers should be counted as gross income. The SEPTIC Act would amend the Internal Revenue Code of 1986 to provide a clear nationwide exclusion.
The issue is particularly pressing in Florida, where roughly 2.6 million households rely on septic systems. When these aging systems leak, they release contaminants into groundwater and coastal ecosystems. Many local programs, such as the Phillippi Creek project in Sarasota County, already help residents transition to better infrastructure, but the new bill would standardize the tax-exempt status of that help across the country.
Representative Tom Suozzi emphasized that the timing of the bill is no coincidence. “On Tax Day, Americans across the country were reminded of how much they already pay in taxes,” Suozzi said. “The federal government should be encouraging that [upgrading systems], not making it more expensive.”
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The legislation covers “wastewater management measures,” including the installation or modification of septic tanks and cesspools. For many homeowners, these repairs can cost tens of thousands of dollars, making government assistance vital.
“Outdated septic systems in Hernando, Citrus, and Pasco Counties threaten the health of our waterways,” Rep. Bilirakis noted, adding that the bill is designed to modernize infrastructure without placing an “unnecessary financial burden” on residents.
If passed, the changes would take effect for any grant money received after the date the Act is signed into law.
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