The Texas Legislature allows the exemption of part or all of the assessed value of the property on which approved water conservation initiatives, such as rainwater harvesting, are made (Texas Tax Code §11.32).
Individuals planning to install rainwater harvesting systems should check with their respective county appraisal districts for guidance on exemption from county property taxes.
In addition, the Texas Tax Code exempts rainwater harvesting equipment and supplies from state sales tax (Texas Tax Code §151.355). To claim this exemption, present a Texas Sales and Use Tax Exemption Certificate (back of Form 01-339) to the supplier of the equipment at the time of purchase. Find the form online at www.comptroller.texas.gov/forms/01-339.pdf.
Some municipalities, local water providers, and counties also offer rebates and financial incentives to promote rainwater harvesting as part of their water conservation initiatives.
Texas has several laws supporting rainwater harvesting. Texas Property Code prevents a homeowner’s association from prohibiting the use of rainwater harvesting systems (Texas Property Code §202.007). The state also requires certain new state facilities to incorporate rainwater harvesting systems in their design (Texas Government Code §447.004(c)(8)).
Municipalities and counties are also encouraged to promote rainwater harvesting at residential, commercial, industrial, and educational facilities through incentives such as discounts for rain barrels or rebates for water storage facilities (Texas Local Government Code §580.004).
Additionally, a municipality or county cannot deny a building permit solely because the facility will implement rainwater harvesting; however, it may require that the system comply with the minimum state standards established for such systems (Texas Local Government Code §580.004).
source: Texas Water Development Board (www.twdb.texas.gov)