Proposed Legislation for Brownfield Redevelopment Tax Incentive

The U.S. House of Representatives Ways and Means Committee is currently reviewing the proposed Brownfields Redevelopment Tax Incentive Reauthorization Act of 2023. This legislation aims to reintroduce the tax incentives originally offered to owners of brownfield properties in the Taxpayer Relief Act of 1997.

What Impact Will the Tax Incentive Have?

The 1997 legislation allowed property owners who investigated and performed environmental remediation on their contaminated sites to deduct cleanup costs from their federal income taxes. Before expiring in 2012, this deduction was used over 600 times in 40 states.

By bringing back this tax deduction, developers will be able to greatly reduce remediation costs, which are typically the greatest expense associated with owning and developing a brownfield site.

Currently, depending on state and local taxes and their income tax bracket, developers can reduce their costs by one third. If the proposed legislation is passed to restore the federal tax incentive, developers could reduce their costs by one half. The incentives would also be available to state and local governments and non-profit organizations involved in brownfield site environmental remediation projects.

In addition to reducing remediation costs, the tax incentive also opens up this opportunity to those who voluntarily purchase and remediate brownfield sites. Currently, remediation deductions need to be spread out over ten years. If the legislation is passed, parties will be able to deduct all cleanup costs on their federal income tax return in the year the money is spent on cleanup efforts.

This new deduction would be a compelling reason for developers, government agencies, and non-profit organizations to take on contaminated brownfield sites, mitigate environmental impacts, and redevelop and return them to uses that will benefit their communities. The funds saved by this deduction can also be reinvested into continuing work on said brownfield sites.

Why Take on a Brownfield Project?

By remediating and cleaning up brownfield sites, what were once blights can become prosperous parts of a community by becoming retail or office space, housing, parkland, and more. Brownfield projects also reduce the numbers of vacant and abandoned properties, create job opportunities, and stimulate local economies, all of which can have a significant positive impact throughout a community.

Walden will continue to follow this piece of legislation and will post updates on any changes that may be made in the near future. If you are interested in or need assistance with a brownfield site, contact Walden at 516-744-5863. Our team is experienced in brownfield site investigations and remediation and can help you navigate the process of applying for participation in brownfield cleanup programs and addressing environmental contamination in order to revitalize these sites.