Sponsors (2)
The bill provides targeted federal tax relief to households that directly pay utility bills and itemize—especially in high-utility-tax areas—but reduces federal revenue and delivers uneven benefits that exclude many renters and standard-deduction taxpayers.
Households and taxpayers who directly pay gas or electric utility bills and who itemize can deduct state and local taxes and surcharges on those bills, lowering their taxable income and reducing federal income tax owed; households in high-utility-tax states receive larger dollar savings.
All taxpayers and federal finances: The deduction reduces federal tax revenue, which could increase deficits or create pressure to cut or reprioritize funding for public programs funded by general revenues.
Low- and middle-income taxpayers who take the standard deduction: Will generally not benefit because the provision only helps those who itemize, concentrating the tax advantage among itemizers (often higher-income households).
Renters and households with utilities included in rent: Are less likely to benefit because the deduction favors households that directly pay utility bills, creating an unequal distribution of tax relief across housing situations.
Based on analysis of 2 sections of legislative text.
Adds a federal income tax deduction for taxes and state-mandated surcharges listed on gas and electric utility bills.
Introduced April 16, 2026 by Josh Riley · Last progress April 16, 2026
Allows taxpayers to deduct taxes and state-mandated surcharges that appear on their gas or electric utility bills from federal taxable income as a deduction under 26 U.S.C. §164(a). The change takes effect for taxable years beginning after enactment and primarily affects taxpayers who pay gas or electric bills and who itemize deductions, while reducing federal revenues to the extent deductions are claimed.