No Taxes on Utility Bills Act
- Sponsor
- Rep. Riley, Josh [D-NY-19]
- Committees
- Ways and Means Committee (primary)
- Last action
- Apr 16, 2026
Bottom line
This bill creates a new federal tax deduction for state and local taxes and surcharges paid on gas and electric utility bills, potentially reducing the federal tax liability for individuals and businesses who itemize.
What it actually does
This bill amends Section 164(a) of the Internal Revenue Code of 1986 to allow taxpayers to deduct all state and local taxes and state-mandated surcharges included on their gas or electric utility bills. This expands the types of deductions available under current law, which primarily covers income, real estate, and personal property taxes. The changes would apply to taxable years beginning after the date of the bill's enactment.
Proponents argue
Supporters argue this bill would provide much-needed tax relief to households and businesses facing rising utility costs, particularly in states with high energy taxes and surcharges. They contend it would help offset the financial burden imposed by state-level mandates and taxes, making essential utility services more affordable and leaving more disposable income for taxpayers.
Opponents contend
Opponents might argue that this deduction would disproportionately benefit higher-income taxpayers who itemize deductions, while offering little to no relief for lower-income individuals who take the standard deduction. They could also raise concerns about the potential for increased federal budget deficits due to reduced tax revenue, effectively shifting the burden from state and local utility taxes to the federal taxpayer.
The bill is exceptionally short and clear, making it very accessible for any reader to understand its direct impact.
Section 2(a) and 2(b)
Deduction for Taxes and State-Mandated Surcharges on Utility Bills
This provision amends Section 164(a) of the Internal Revenue Code of 1986 to explicitly allow taxpayers to deduct "All taxes, and State-mandated surcharges, included on the taxpayer's gas or electric utility bills." Currently, Section 164(a) allows deductions for state and local income, real estate, and personal property taxes, subject to limitations like the SALT cap. This bill adds utility bill taxes and surcharges to the list of deductible items, and a conforming amendment ensures these surcharges are treated similarly to taxes for deduction purposes.
Supporters argue
Supporters argue this deduction directly addresses the rising cost of living by making essential utility services more affordable. They contend it provides targeted relief to taxpayers burdened by state and local government levies on necessary services, promoting economic well-being and fairness.
Critics contend
Critics might argue that this deduction primarily benefits wealthier taxpayers who itemize, while those who take the standard deduction, often lower- and middle-income individuals, would see no benefit. They may also point out that it shifts the burden of state and local utility costs to the federal budget, potentially increasing the national deficit.
Tradeoffs
The bill balances the desire to provide tax relief to utility consumers against concerns about federal revenue loss and the potential for disproportionate benefits to higher-income taxpayers. It also raises questions about federal involvement in mitigating state and local tax burdens.