The Florida Senate
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Finance and Tax
INTRODUCER: Finance and Tax Committee; and Senators Burgess and Calatayud
SUBJECT: Residential Graywater System Tax Credits
DATE: March 21, 2023 REVISED:
1. Hackett Ryon CA Favorable
2. Gross Babin FT Fav/CS
3. AP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 358 creates a corporate income tax credit for the purchase of residential graywater
systems. The credit is equal to 50 percent of the cost of each system, up to $4,200 per system.
The credit applies to taxable years beginning on or after January 1, 2024. The bill specifies
eligibility conditions for the credit, authorizes the carryforward of unused credits, and authorizes
the Department of Revenue (DOR) and the Department of Environmental Protection (DEP) to
adopt rules to implement the tax credit. Additionally, the DOR is authorized to share information
related to the tax credit with the DEP.
The Revenue Estimating Conference (REC) has not analyzed the committee substitute. The REC
determined that the prior version of the bill would result in a reduction to General Revenue Fund
receipts by an indeterminate amount beginning in Fiscal Year 2023-2024.
The bill takes effect on July 1, 2023.
II. Present Situation:
Graywater, Residential Systems, and Development Incentives
Graywater is the part of domestic sewage that is not carried off by toilets, urinals, and kitchen
drains. It includes waste from the bath, lavatory, laundry, and sink, except for kitchen sink
BILL: CS/SB 358 Page 2
waste.1 Graywater installations occur in both residential and non-residential properties and the
capture, treatment, and reuse of graywater yields usable water that would otherwise be directed
to the sewer.2 Reusing graywater also supplants the use of potable water for non-potable needs
and conserves fresh water.3
The Florida Building Code specifies that graywater may only be used for flushing toilets and
urinals. Any discharge from the building must be connected to a public sewer or an onsite
sewage treatment and disposal system in accordance with Department of Health regulations in
chapter 64E-6 of the Florida Administrative Code.4 Graywater systems in Florida have several
requirements: the graywater must be filtered, disinfected, and dyed; and storage reservoirs must
have drains and overflow pipes that must be indirectly connected to the sanitary drainage
To encourage adoption of residential graywater reuse in the state, counties, municipalities, and
special districts are required to implement incentives for the use of graywater technologies.6 To
do this, they must authorize the use of residential graywater technologies in their respective
jurisdictions and provide specific density or intensity bonuses to developers or homebuilders if a
certain percentage of a proposed or existing development will have a graywater system
Water Reuse Systems Certification
Various certifications are used to establish standards for reused water. Recycled graywater is
tested for attributes such as biochemical oxygen demand, suspended solids, and bacteria
presence. The National Science Foundation, a federal agency, and the American National
Standards Institute, a nonprofit organization, have produced standards for on-site residential and
commercial water reuse treatment systems, the most rigorous of which is referred to as
“NSF/ANSI 350.” Products are tested for at least 26 weeks for performance, and other
evaluations are completed, before a product is granted certification.8 There are several products
that have achieved this certification, with costs ranging from $1,000 to $10,000.9
Section 381.0065(2)(f), F.S.
Alliance for Water Efficiency, Graywater Systems, available at: (last visited Mar. 8, 2023).
Martinez, Christopher J., Gray Water Reuse in Florida, University of Florida IFAS Extension,,to%20the%20sanitary%20drainage%20sys
tem (last visited Mar. 8, 2023).
2020 Florida Building Code – Plumbing, Seventh Edition (Dec. 2020), available at: (last visited Mar. 8, 2023).
Section 403.892(2), F.S.
National Science Foundation, NSF/ANSI Standard 350 for Water Reuse Treatment Systems, available at: (last visited Mar. 8, 2023).
Id. See also Todd Woody, Install a Greywater System to Lower Utility Bills and Save Water, BLOOMBERG NEWS, Mar. 17,
2022, available at:
system?leadSource=uverify%20wall (last visited Mar. 8, 2023).
BILL: CS/SB 358 Page 3
Corporate Income Tax
Florida imposes a 5.5 percent tax on the taxable income of certain corporations and financial
institutions doing business in Florida.10 Corporate income tax11 is remitted to the DOR and
distributed to the General Revenue Fund. Florida utilizes the taxable income (for each
corporation’s taxable year) determined for federal income tax purposes as a starting point to
determine the total amount of Florida corporate income tax due.12 The first $50,000 of net
income is exempt.13
Statutes authorize various incentives and credits which offset corporate income tax liability.14
Credits against corporate income tax are applied in an order established by law.15 There is
presently no credit available against corporate income tax for the purchase of residential
greywater systems.
III. Effect of Proposed Changes:
The bill creates s. 220.199, F.S., which provides a tax credit against corporate income tax for
developers and homebuilders that purchase a qualifying residential graywater system for use in
Florida. The credit may be applied to taxable years beginning on or after January 1, 2024, and is
equal to 50 percent of the cost of each system purchased during the taxable year, not to exceed
$4,200 per system purchased.
Eligible systems must be NSF/ANSI 350 Class R certified noncommercial, residential graywater
systems. To claim a credit, an applicant must submit to the Department of Environmental
Protection (DEP) reasonable assurances that the system meets these requirements as well as a
manufacturer’s warranty assuring the system will function as designed. The DEP must, within 60
days of a completed application, determine if the applicant is eligible for a credit and issue to the
applicant and the DOR a certification to that effect. Taxpayers must attach the certification to the
tax return on which the credit is claimed.
The bill provides that unused tax credits may be carried forward for up to two taxable years, and
authorizes the DOR and the DEP to adopt rules to administer the tax credit.
The bill amends s. 220.02(8), F.S., to include the new tax credit at the end of the Legislature’s
intended order of tax credit application.16
The bill amends s. 220.13, F.S., to provide that a taxpayer may not apply the same credit to both
federal income and Florida corporate income taxes.17
Sections 220.11(2) and 220.63(2), F.S.
Referred to officially as the Florida Corporate Income/Franchise Tax.
Section 220.12, F.S.
Section 220.14, F.S.
Florida Department of Revenue, Corporate Income Tax Incentives, available at: (last visited Mar. 8, 2023).
Section 220.02(8), F.S.
Section 2.
Section 3.
BILL: CS/SB 358 Page 4
The bill takes effect July 1, 2023.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
Not applicable. The bill does not require counties and municipalities to spend funds, limit
their ability to raise revenue, or reduce the percentage of a state tax shared with them.
Therefore, the mandates provisions of s. 18, Art. VII of the State Constitution do not
B. Public Records/Open Meetings Issues:
C. Trust Funds Restrictions:
D. State Tax or Fee Increases:
The bill does not create or raise state taxes or fees. Therefore, the requirements of s. 19,
Art. VII of the State Constitution do not apply.
E. Other Constitutional Issues:
None identified.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
The Revenue Estimating Conference has not analyzed the committee substitute. The REC
determined that the prior version of the bill would result in a reduction to General
Revenue Fund receipts by an indeterminate amount beginning in Fiscal Year 2023-2024.
B. Private Sector Impact:
Qualified businesses that purchase residential greywater systems and meet the
requirements may decrease corporate income tax liability by up to $4,200 per unit
C. Government Sector Impact:
The DOR estimates it will incur administrative costs of $39,728 in Fiscal Year 2024-
2025 as a result of the bill.18
Florida Dep’t of Revenue, Senate Bill 358 Bill Analysis (Feb. 17, 2023) (on file with the Senate Committee on Finance and
BILL: CS/SB 358 Page 5
VI. Technical Deficiencies:
VII. Related Issues:
The DOR has identified that, due to confidentiality regulations, an exception may be necessary to
allow the DOR to communicate with DEP in administering the bill.19
VIII. Statutes Affected:
This bill substantially amends sections 220.02 and 220.13 of the Florida Statutes.
This bill creates section 220.199 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Finance and Tax on March 21, 2023:
The committee substitute:
 Authorizes the Department of Revenue to share information with the Department of
Environmental Protection related to the graywater system tax credit.
 Requires developers or homebuilders to submit an application with the Department of
Environmental Protection rather than the Department or Revenue.
 Requires eligible graywater systems to be purchased for use in Florida.
 Specifies that the Department of Environmental Protection must determine eligibility
within 60 days after receipt of a completed application.
 Provides the Department of Environmental Protection with rulemaking authority.
 Removes an unnecessary definition.
 Makes other technical and conforming changes.
B. Amendments:
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.

Statutes affected:
S 358 Filed: 220.02, 220.13
S 358 c1: 213.053, 220.02, 220.13