Steube, Suozzi Introduce Bipartisan Bill to Exempt Septic Replacement Grants from Federal Income Tax

WASHINGTON - U.S. Representatives Greg Steube (R-Fla.), Tom Suozzi (D-N.Y.), Aaron Bean (R-Fla.), and Gus Bilirakis (R-Fla.) introduced the SEPTIC Act, legislation to create a uniform federal income-tax exclusion for financial assistance provided to homeowners for septic system replacement.

The SEPTIC Act ensures that grants, subsidies, or financial assistance provided by state and local governments for septic system repair, replacement, or connection to centralized sewer systems are not treated as taxable income under federal law.

"Families shouldn't be taxed for making critical upgrades that protect their health, water quality and their communities," said Rep. Steube. "Florida represents 12% of the United States' septic systems. Failing septic systems pose serious risk to our water supply and public health. In Florida alone, approximately 2.6 million households rely on septic systems, making this an issue that impacts millions of families across our state. The SEPTIC Act ensures homeowners can access assistance to fix these systems without being hit with an unexpected tax bill."

"Families shouldn't be taxed for doing the right thing," said Congressman Tom Suozzi. "On Tax Day, Americans across the country were reminded of how much they already pay in taxes. Upgrading a septic system protects our drinking water, safeguards public health, and preserves our environment. The federal government should be encouraging that, not making it more expensive. This commonsense, bipartisan bill reduces the tax burden on homeowners who are trying to do the responsible thing for their families and their communities."

"Florida's 2.6 million septic system households shouldn't be taxed for improving their wastewater systems and protecting our clean water. The SEPTIC Act ensures septic replacement grants aren't treated as taxable income, helping families upgrade failing systems, protect public health, and safeguard local waterways without unnecessary financial burden. I am pleased to join Congressman Suozzi in this effort," said Congressman Aaron Bean.

"Outdated septic systems in Hernando, Citrus, and Pasco Counties threaten the health of our waterways and communities," said Congressman Gus Bilirakis. "I am proud to co-lead the SEPTIC Act to authorize septic replacement grants that will help modernize aging systems, reduce pollution, and protect Florida's natural resources for future generations. This commonsense legislation supports homeowners, strengthens infrastructure, and helps preserve the waterways that are vital to our economy and way of life."

Background: In Sarasota County, the Phillippi Creek Septic System Replacement Program has helped improve water quality by assisting homeowners transitioning from septic systems to centralized sewer service.

While Sarasota's program is structured to afford tax-exempt assistance, this bill creates a uniform federal income-tax exclusion for all septic system subsidies across the country. In Florida alone, nearly 30% of residents rely on septic systems, making this a critical issue for our communities.

Americans rely on septic systems for wastewater treatment, especially in rural and coastal communities. In Florida, approximately 2.6 million households depend on septic systems, which represents nearly 12 percent of all septic systems in the United States.

Over time, aging and failing septic systems can leak harmful contaminants into groundwater, rivers, and other coastal ecosystems, contributing to water quality degradation and public health risks.

To address these issues, many state and local governments have established programs that provide financial assistance to homeowners to repair or replace failing systems or connect to centralized sewer infrastructure. However, under current federal tax law, some of this is treated as taxable income, creating a financial burden for participating homeowners.

Under current law, the tax code is unclear if these financial assistance programs are not subject to federal income tax. The SEPTIC Act creates a clear federal income-tax exclusion for septic replacement assistance, so families can access critical upgrades without unexpected tax assessments.

Read the full bill text here.