No Taxes on Utility Bills Act
Introduced April 16, 2026 · Last action April 16, 2026
Plain English Summary
This bill allows taxpayers to deduct taxes and state-mandated surcharges that appear on their gas and electric utility bills from their federal income taxes, starting in tax years after the bill is enacted. Currently, most utility taxes and surcharges cannot be deducted. The bill creates a new deduction category under Section 164 of the Internal Revenue Code.
Who benefits
Homeowners and businesses in high-tax states with substantial utility taxes and surcharges—particularly in states like New York and New Jersey where utility taxes are relatively high. Taxpayers who itemize deductions (not those using the standard deduction) will benefit most, meaning higher-income households. Multi-unit residential and commercial property owners with large utility bills will see the largest absolute tax savings.
Who pays / loses
The U.S. Treasury loses tax revenue from foregone income tax collections. Taxpayers using the standard deduction (roughly 70% of taxpayers) receive no benefit and effectively subsidize the deduction benefit for itemizers. States with lower utility tax rates and those without state-mandated surcharges see less fiscal benefit relative to their residents. Lower-income households are disadvantaged because they are less likely to itemize and benefit from the deduction.
Funding & Lobbying Interests
Utility companies and energy providers have a financial interest in this bill because it effectively subsidizes utility consumption by reducing the after-tax cost of utility bills, which could increase demand. State governments with high utility taxes benefit from maintaining those taxes with reduced political opposition. The bill's sponsors—Rep. Riley (R-NY) and Rep. Van Drew (R-NJ)—represent high-tax states where utility surcharges are substantial, suggesting backing from constituents in those states. No specific donor finance data was provided.
Political Impact
Affected Groups
High-income itemizing taxpayers in high-tax states, particularly New York and New Jersey where both sponsors represent districts. Homeowners and businesses with large utility bills (residential and commercial property owners). Lower-income and middle-income taxpayers using the standard deduction receive no benefit. Approximately 30% of taxpayers itemize deductions nationally, but the rate is significantly higher among those earning over $100,000.
Political Subtext
Proponents frame this as tax relief for families struggling with utility costs, particularly in high-tax northeastern states. Critics note that the benefit accrues primarily to higher-income itemizers, functions as a subsidy for utility consumption, reduces federal revenue without targeting low-income households effectively, and that state-mandated surcharges (often for renewable energy or infrastructure) are policy choices that should not be subsidized federally. Non-partisan analysis would focus on the distributional impact: the deduction is regressive because higher-income households benefit disproportionately, and the revenue cost falls on all taxpayers.
Real-World Stakes
If passed, federal tax revenue declines by an amount equal to the tax expenditure for utility deductions claimed. High-income households in high-tax states see immediate tax relief; lower-income households see none. The deduction lowers the effective price of utilities, which may slightly increase consumption. Analogous state-level deductions (such as state income tax deductions for local taxes) show that tax expenditures for such purposes are regressive and reduce revenue for other priorities. The bill does not limit deduction amounts, meaning households with very high utility bills (large commercial properties, multi-unit residential buildings) receive large subsidies.
Sponsor
Sponsor information not available.
Vote Record
No recorded votes.
Campaign Finance — Primary Sponsor
No campaign finance data available yet.
501(c)(4) disclosure: Contributions from 501(c)(4) "dark money" organizations are not required to be publicly disclosed and are not reflected in the figures above. Data sourced from FEC public disclosure filings.
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