2025 SRF funding breakdown: Where billions in water infrastructure dollars are headed

The State Revolving Fund (SRF) programs are delivering an unprecedented infusion of funding to water and wastewater projects in 2025. Thanks to the Bipartisan Infrastructure Law (BIL) and annual appropriations, states collectively have around $8.9 billion in new SRF capitalization grants this year, not including an additional $3 billion dedicated specifically to lead pipe replacements.

For utilities, engineering firms, contractors, and equipment suppliers, these allocations signal a wave of project opportunities. SRF dollars drive design and construction of treatment plants, pipe replacements, and system upgrades nationwide, meaning businesses that build and equip water infrastructure are directly impacted by how states deploy these funds.

Knowing where the money is flowing (and for what priorities) can help industry stakeholders target bids and partnerships accordingly.

SRF programs recap: Clean water, drinking water, and BIL enhancements

The SRF programs, one for clean water and one for drinking water, have long been the financial backbone for U.S. water infrastructure improvements.

The Clean Water State Revolving Fund (CWSRF) primarily finances wastewater treatment plants, sewer systems, stormwater projects, and pollution control for nonpoint sources (like runoff).

The Drinking Water State Revolving Fund (DWSRF) supports public water system needs, from treatment facilities and storage tanks to distribution pipe upgrades and removal of contaminants like lead.

States manage these revolving loan programs with federal grants and state matches, offering low-interest loans and, in many cases, principal forgiveness for disadvantaged communities.

The 2021 Bipartisan Infrastructure Law (BIL) supercharged both SRFs with an extra $43+ billion over five years dedicated to water infrastructure. Notably, BIL provides:

• $11.7 billion each for CWSRF and DWSRF general funding (over 2022–2026), essentially doubling the typical annual federal SRF support. These funds can go to a wide range of water and wastewater projects, from plant upgrades to pipe replacements. Importantly, 49% of this BIL SRF money must be given out as grants or loan forgiveness (not just loans) to address affordability and equity goals. The remaining 51% still flows as low-interest loans.

• $15 billion via DWSRF specifically for lead service line replacement. This is a targeted pot to help states and cities replace millions of lead pipes delivering drinking water. Here too, 49% is provided as forgivable funding to ensure economically stressed communities can tackle lead removal. State matching funds are not required for this category, speeding up implementation. (The $3-billion yearly allotment for lead line work is in addition to the $8.9-billion general SRF funds noted earlier.)

• $5 billion for emerging contaminants in drinking water (via a separate grant program for small or disadvantaged communities) and $1 billion for emerging contaminants in wastewater. In practice, this translates to SRF supplemental grants focused on issues like PFAS (per- and polyfluoroalkyl substances, the “forever chemicals”) and other contaminants of emerging concern. All of the emerging contaminant funds are distributed as grants/principal forgiveness with no state match, effectively 100% subsidy to communities to tackle things like PFAS in drinking water or in wastewater/stormwater discharges.

Overall, the BIL enhancements mean the SRFs in 2025 are not business-as-usual financing sources, but rather turbocharged programs with new sub-accounts for critical priorities (lead, PFAS) and requirements to direct nearly half of funds as subsidies to disadvantaged communities.

This combination of more money and targeted focus areas is reshaping state funding plans, as we’ll see in the 2025 snapshot.

2025 funding snapshot: National totals, top states, and trends

How much money is on the table in 2025?

According to EPA’s FY 2025 allotments, states are receiving about $8.9 billion in new SRF funding this year, plus the roughly $3 billion in dedicated lead service line replacement funds, bringing total potential SRF funding close to $12 billion nationally.

This represents one of the highest annual investment levels in the programs’ history, roughly double or more the pre-BIL typical funding level. For comparison, the regular (base) federal SRF appropriations have hovered around $2.5–$3 billion per year across both programs; BIL is adding billions more each year through 2026.

So, which states are getting the biggest shares?

The SRF allotment formulas (based on state population and infrastructure needs) translate this national total into state-by-state funding amounts. In 2025 the top recipients of combined SRF dollars (Clean Water + Drinking Water) are:

1. California ~$774 million (by far the largest)

2. New York ~$673 million

3. Texas ~$541 million

4. Ohio ~$338 million

5. Illinois ~$325 million

6. Pennsylvania ~$312 million

7. Florida ~$301 million

8. Michigan ~$282 million

9. New Jersey ~$251 million

10. Massachusetts ~$238 million

These allocations generally reflect state populations and water system needs. Also, note that these specific figures are in flux as some state-level nuances may shift slightly as 2025 IUPs are finalized throughout the year.

Nonetheless, the figures do correspond generally to the sheer size of each jurisdiction. California’s SRF share for 2025 exceeds $770 million, split between roughly $305 million in clean water funds and $469 million in drinking water funds. New York is next, with over $334 million (clean water) and $203 million (drinking water). Texas, with its growing population, also tops half a billion dollars in SRF funding this year.

In general, populous states in the Northeast, Midwest, and South see the largest allotments, whereas small states and territories receive minimum allocations (for instance, many smaller states receive around $20–$43 million total per program due to 1% minimum allotments).

Year-over-year changes and shifts

One notable trend in 2025 is the continuing impact of revised formulas for the BIL-funded categories.

In the Drinking Water SRF, EPA updated how lead service line funds are apportioned starting in FY 2023 to better align with the estimated number of lead pipes (“lead burden”) in each state.

This led to some big swings in funding: for example, Florida, Illinois, and Ohio each saw their federal lead line funding more than double from 2022 to 2023, based on new data showing those states have many more lead pipes than previously thought. Florida and Illinois now each have over $230 million allotted just for lead service line replacement from the SRF’s BIL funds, a huge jump that has reoriented their priorities.

On the other hand, states like California and Texas actually saw decreases in their share of lead-line money under the new formula (California’s lead allotment dropped by over $220 million year-over-year). This shift underscores how funding priorities are evolving to target the most serious problems, even if it means traditional front-runner states getting a slightly smaller piece of a much bigger pie in certain categories.

Another significant emphasis in 2025 is on disadvantaged communities and subsidized assistance. As noted, 49% of BIL SRF funds must be used for grants or principal-forgiveness loans to disadvantaged communities, far above the usual subsidy levels. States have accordingly adjusted their Intended Use Plans to channel much of the new money into affordability programs; for example, forgiving large portions of loans for communities that meet hardship criteria.

In practical terms, this means more projects in lower-income, smaller, or environmental justice communities are moving forward. It’s a shift in who benefits, not just how much money is available.

States are also seeing new categories of projects rise in priority thanks to BIL: lead pipe inventories and replacements, PFAS treatment installations, and “green” infrastructure (which often qualifies for principal forgiveness) are claiming larger slices of the funding than in years past. Many states’ 2025 plans explicitly earmark federal dollars for these purposes, whereas a decade ago the focus might have been more strictly on traditional sewer or water plant projects.

In short, 2025’s SRF funding is not only larger, but also more targeted. The influx of federal dollars is being steered toward pressing national issues (aging lead pipes, emerging contaminants, nutrient pollution) and toward communities most in need. For the water industry, this translates to a pipeline of projects that is broader in scope (e.g. new treatment technologies for PFAS, full lead service line replacement programs, green stormwater infrastructure installations) and often faster-moving (as states rush to obligate the one-time BIL funds).

Next, we’ll look at a few concrete examples of how states are deploying their 2025 SRF allocations in the field.

SRF-funded projects in 2025: Examples from the field

The Paddock Viaduct connects crosses the Trinity River and connects downtown with North Fort Worth.

To illustrate how SRF dollars are being put to work, here are several real-world examples from state funding plans in 2025. These cases highlight different project types and community sizes: from a small village replacing lead pipes to a major city upgrading treatment for emerging contaminants. Each demonstrates the kind of opportunities SRF funding is opening up for contractors, engineers, and suppliers:

• Illinois – Lead Service Line Replacements in a Small Community: Illinois EPA recently awarded a $2.3 million SRF loan (with 100% principal forgiveness) to the Village of Forest Park (population ~14,000) to remove and replace 369 lead service lines in the community. Thanks to this forgivable SRF funding, the village can eliminate about a quarter of its total lead pipes at no cost to the local budget, accelerating progress under Illinois’ lead reduction law.

  • This kind of project – packing hundreds of pipe replacements into a single contract – creates substantial work for construction crews and pipe suppliers, and it wouldn’t be feasible so quickly without the BIL-funded boost to the SRF. Illinois has made lead service line removal a top priority: after providing $89 million for lead pipe projects in 2024, the state has over $120 million reserved for lead service line work in 2025 alone. For contractors specializing in water line replacement and restoration, states like Illinois now offer a robust, funded market for lead mitigation projects.

• Texas – PFAS Mitigation via Clean Water SRF (Large City Example): In May 2025, the Texas Water Development Board approved a $4-million CWSRF Emerging Contaminants grant (principal forgiveness) for the City of Fort Worth. The city will use these funds to construct a treatment facility to remove PFAS chemicals from leachate at its Southeast Landfill. PFAS from landfill leachate can contaminate groundwater or strain wastewater plants, so this project – a non-point source pollution control effort – will install a specialized PFAS treatment system to clean up the landfill’s runoff.

  • It’s a great example of how BIL has enabled new kinds of clean water projects: traditionally, SRF loans for a city like Fort Worth might fund a sewer or plant expansion, but here the focus is a targeted emerging contaminant solution. For technology vendors and engineering firms, projects like this mean real dollars for advanced treatment equipment (e.g. carbon filters or resin systems for PFAS) and associated construction.

  • The Fort Worth project was funded out of the $225 million CWSRF Emerging Contaminants allotment that EPA distributes to states each year under BIL. With all of that $1 billion (over 5 years) required to be given as grants, states are actively looking to spend it on PFAS and other contaminant clean-ups. Multiple states have set up application programs for communities to get PFAS treatment grants, and even large cities like Fort Worth are tapping in. This translates to a growing pipeline of design-build projects for PFAS removal – a field that barely existed in municipal finance a few years ago.

• Kansas – Nutrient Removal Upgrades at a Major Wastewater Facility: On the wastewater side, many states are using their expanded CWSRF funds to tackle longstanding pollution issues like nutrient overloading. For instance, Wichita, Kansas initiated a $65 million SRF-funded upgrade of its two main wastewater treatment plants in 2023 (with construction continuing into 2025). The project’s aim is to add biological nutrient removal (BNR) processes – specifically a 3-stage anaerobic/anoxic/oxic treatment system – to one of the plants, and to rehabilitate pumps, clarifiers, and other infrastructure at both facilities.

  • This massive overhaul, supported in part by Kansas’s share of BIL general supplemental funds, will significantly reduce nitrogen and phosphorus discharges from Wichita’s sewer system. For large contractors and engineering firms, projects like Wichita’s offer multi-year engagements encompassing civil construction, mechanical/electrical work, and process control integration (a SCADA upgrade is part of Wichita’s plan as well).

  • Beyond Wichita, other states (especially in the Chesapeake Bay and Mississippi River basins) are also channeling SRF dollars into nutrient removal upgrades, creating demand for specialist expertise in BNR process design and equipment (e.g. fine-bubble diffusers, mixers, chemical feed systems). These projects deliver environmental benefits – algae blooms and dead zones can be curbed by cutting nutrient pollution – while also modernizing aging treatment infrastructure.

Each of these examples underscores a key point: SRF funding is enabling projects that address high-priority water challenges (lead, PFAS, nutrients) at scales and speeds that wouldn’t be possible otherwise.

For the business community, this means a wealth of opportunities in related product and service niches, from supplying compliant pipes and meters for lead line replacements, to designing PFAS treatment modules, to constructing advanced treatment process upgrades. It also means that keeping abreast of state SRF plans is more important than ever, since that’s where upcoming projects are listed.

Pursuing SRF-funded opportunities

Given the flood of SRF dollars and projects, how can contractors, consultants, and suppliers position themselves to win work?

A B2B strategy in the water sector now must include monitoring state SRF Intended Use Plans (IUPs) and related announcements. Each state publishes annual IUPs for its Drinking Water and Clean Water SRFs: essentially a roadmap of how that year’s federal funds (and state matching dollars) will be used. These plans typically include project priority lists: ranked lists of utility projects that are slated for SRF financing.

For example, Pennsylvania’s 2025 IUP includes a list of drinking water and wastewater projects the state intends to fund with FY25 money, and it’s open for public comment before being finalized. States often release draft IUPs in the spring or early summer, allow a 30-day comment period, then finalize the plans by late summer so they can apply for the EPA grants and start issuing loans.

Businesses can leverage this cycle by reviewing the draft and final IUPs for projects relevant to their services. If you see, for instance, that a medium-sized city is listed to get an SRF loan for a new water treatment plant in 2025, you’ve got an early heads-up to begin marketing to that city, forming a team, or tracking when the design RFP or construction bid will be issued.

States publish IUPs on their agency websites (often under environment or water infrastructure departments); some even have interactive SRF project portals. Many states also hold public meetings or webinars about their IUPs where upcoming projects are discussed. Staying tuned into these channels is crucial. It’s common for savvy engineering firms to submit comments on IUPs or at least attend the hearings, both to learn details and to signal their interest in upcoming work.

Additionally, trade associations (like state chapters of AWWA, WEF, or rural water associations) often summarize key points of IUPs and intended funding lists, which can save busy suppliers time.

The bottom line is: the IUP is the “advance notice” of projects that will be financed. If you’re a pump manufacturer, knowing that five small towns in your region plan to build new wells and treatment for PFAS means you can reach out to those towns or their consulting engineers early on. If you’re a construction firm, seeing a large wastewater plant upgrade on the list tells you to watch for design-build or bid announcements coming not long after.

Another aspect for businesses to watch is how states handle their SRF application cycles and “Intended Use” updates throughout the year. Some states operate on a rolling or continuous application basis; for example, Pennsylvania’s PENNVEST program accepts projects year-round and holds quarterly board meetings to approve loans. In those cases, the formal IUP list may just be a snapshot, and additional projects can get added as communities apply later. Other states have defined annual application deadlines and then a fixed project priority list for that year. Knowing these rhythms allows firms to align their marketing: e.g., assisting a client to submit an SRF application by the deadline, or timing a proposal so the community can include it in their funding request.

Finally, businesses should be mindful of the federal requirements attached to SRF-funded projects, as these can affect bidding and procurement.

All SRF projects must comply with federal cross-cutters like Davis-Bacon prevailing wages, American Iron and Steel (AIS) provisions, and (new under BIL) the Build America, Buy America Act (BABA) domestic procurement rules. Contractors and suppliers that are familiar with these requirements (or have compliant products and labor practices in place) will have a competitive edge in securing SRF-funded contracts.

For example, a pipe supplier that stocks domestically produced ductile iron pipe can confidently bid to SRF projects knowing they meet Buy America rules, whereas those who don’t might be disqualified. Similarly, construction firms adept at certified payroll and prevailing wage compliance can market that ability. States often list these requirements in their bid solicitations – no one wants surprises regarding compliance after the project is awarded. By proactively ensuring your offerings align with SRF mandates, you make it easier for municipalities to choose you for funded projects.

Pro tip: Consider subscribing to state agency newsletters or RFP alert services that pertain to water infrastructure. Many states announce SRF loan approvals or project kick-offs via press releases (e.g., the Illinois and Texas examples above came through state newsrooms). These can clue you into which communities have secured funding – and thus who will be hiring contractors and buying equipment soon.

In essence, follow the money: when a state announces a town got a $5 million SRF loan for a water plant, you can bet that town will be issuing design and construction contracts in short order. The companies that stay ahead of these announcements are the ones most likely to win the work.

Outlook for 2026 and beyond: Final BIL boosts and Future updates

Looking ahead, 2026 will represent the fifth and final year of BIL’s major infusions into the SRF programs.

Stakeholders should anticipate another very high funding total in FY 2026, similar to 2025’s or even slightly more, since any unallocated portions might be rolled in. One thing to watch is the allocation of the last chunk of the $15 billion lead service line fund; by 2026, EPA will have more up-to-date data from the nationwide lead service line inventories (due by late 2024) to potentially refine how that money is split among states. It’s possible we’ll see further recalibration of state shares for lead line work if some states discover they have many more (or fewer) lead pipes than previously estimated.

For the industry, this could mean new hotspots of lead replacement activity emerging in 2026–2027 as the funds get spent. States in the South, for example, were not historically thought of as lead-heavy, but EPA’s recent analysis put Florida, Texas, and North Carolina among the top lead service line states – so companies in those regions should be gearing up for more lead pipe removal projects than one might have expected a few years ago.

Another development to watch in 2026 is how EPA and Congress address the Clean Water SRF allotment formula.

Unlike the Drinking Water SRF, which updates allotments based on a quadrennial needs survey, the Clean Water SRF formula has remained essentially frozen since 1987. This has led to mismatches between where needs are today and where the money goes – some states with fast-growing populations or big needs (think Florida, or parts of the West) get a smaller share than their current needs would warrant, and vice versa.

The Government Accountability Office in late 2023 highlighted this issue and suggested the formula could better reflect current infrastructure needs. There’s increasing talk in the water sector about a potential formula update or an updated Clean Watersheds Needs Survey influencing future funds. If any legislative or administrative change comes, it would be after the BIL funds wind down, perhaps in time for FY 2027 appropriations. This is a longer-term issue, but important: companies operating in states that have historically high funding might see those levels plateau or dip if formulas change, whereas companies in fast-growing states might suddenly find more funding (hence more projects) available.

From a regulatory standpoint, emerging contaminants and new standards will keep pressure on SRF usage beyond 2026. For instance, EPA’s anticipated PFAS drinking water standards (due to be finalized around 2024) will force hundreds of water systems to install treatment for PFOA/PFOS by the late 2020s. The SRF (especially the 100% grant emerging contaminant funds) will likely be a key tool to finance this compliance.

We can expect states to continue prioritizing PFAS projects in their IUPs and even shifting base SRF dollars toward them once the dedicated BIL grants are expended. Likewise, lead service line replacements won’t be completed by 2026 – the $15 billion in BIL is significant but not enough to remove all lead pipes nationwide. There will be calls for additional funding (some advocates talk about a follow-on federal program or more SRF authorizations) to keep momentum. Contractors and suppliers should plan for lead and PFAS work to extend well into the late 2020s and 2030s, potentially supported by extended grant programs or state-level funding even after federal BIL money is spent.

In summary, 2025’s SRF allocations mark a high point in water infrastructure investment, and 2026 will carry that torch forward with the last of the BIL boosts.

The industry should prepare for one more year of robust funding and then a potential inflection as we return to “normal” SRF funding levels (unless new programs fill the gap). Smart firms will use this time to build relationships and reference projects that position them well for the post-BIL era.

Those projects executed in 2024–2026 using SRF funds will be the success stories that agencies point to, potentially leading to follow-on work. And even as the federal dollars normalize, the needs driving them (aging infrastructure, water quality mandates, community resilience) are not going away. In fact, they are likely to grow. The SRF programs, decades-old but newly supercharged, will remain at the center of water infrastructure finance.

Companies that stay informed and engaged with SRF funding streams – reading the tea leaves of state plans and federal policy shifts – will be best positioned to ride the current wave and capture the opportunities that follow. Water utilities and their partners have a lot to do, and thanks to these funding allocations, they have resources to do it – now it’s on the industry to deliver.