“To amend the Internal Revenue Code of 1986 to provide a credit for American infrastructure bonds, and for other purposes.”
No CRS summary available for this bill.
This section establishes a new direct-payment tax credit for issuers of American infrastructure bonds. The credit equals the applicable percentage of interest payable on the bond, with the percentage set at 42% for bonds issued in calendar years 2026 through 2030, 38% in 2031, 34% in 2032, and 30% in 2033 and thereafter. Qualifying bonds must use 100% of available project proceeds for capital expenditures or operations and maintenance expenditures on property whose acquisition, construction, or improvement would be a capital expenditure; must otherwise qualify for tax-exempt status under section 103; and must be issued pursuant to an irrevocable election. Interest on such bonds is includible in the holder’s gross income. The provision permits current refundings of existing American infrastructure bonds at a 30% credit rate and applies Davis-Bacon prevailing wage requirements to projects financed with bond proceeds. The amendments apply to bonds issued more than 30 days after the date of enactment.
This section limits the issuance of advance refunding bonds by amending section 149(d) of the Internal Revenue Code. It prohibits advance refundings of private activity bonds (other than qualified 501(c)(3) bonds) and allows advance refundings of other bonds only if the refunding bond is the first (or, for pre-1986 bonds, the first or second) such refunding, the refunded bond is redeemed by the earliest call date (or, for pre-1986 bonds, the earliest date at par or a premium of 3 percent or less), the initial temporary period ends no later than 30 days after issuance of the refunding bond, and certain arbitrage restrictions are met. The provision also bars any advance refunding that employs a device to obtain a material financial advantage based on arbitrage apart from interest rate savings, and it includes special rules for pre-October 22, 1986 bonds. A conforming amendment adjusts the determination of the initial temporary period under section 148(f)(4)(C). The changes apply to advance refunding bonds issued more than 30 days after the date of enactment.
This section permanently increases the small issuer exception threshold under the tax-exempt interest expense allocation rules for financial institutions to $30,000,000 (from $10,000,000) in section 265(b)(3) of the Internal Revenue Code and provides an inflation adjustment for the threshold in calendar years after 2026, rounded to the nearest multiple of $100,000. It also revises related special rules by treating qualified 501(c)(3) bonds as issued by the benefiting exempt organization and by establishing treatment for qualified financing issues under which each qualified portion is evaluated separately as if issued by the related qualified borrower. The amendments apply to obligations issued after the date of enactment.