S. 2022 — Tribal Tax and Investment Reform Act of 2025

This section designates the Act as the “Tribal Tax and Investment Reform Act of 2025” and sets forth the table of contents.

This section sets forth congressional findings on the unique federal-tribal government relationship, Indian Tribes' sovereign authority to provide governmental services and develop economies, their recognition as governments eligible for tax exemptions, the need for tax parity under the Internal Revenue Code, historic disadvantages in capital access, and Congress's authority to regulate commerce with Indian Tribes to further tribal self-governance.

This section repeals the essential governmental function requirements applicable to Indian tribal governments under IRC §7871 (i.e., certain restrictions previously limiting tribal exemptions from federal excise taxes and access to tax-exempt bonds). It establishes special rules for tax-exempt bonds issued by Indian tribal governments, including (1) a national bond volume cap of $400 million for calendar year 2026 (inflation-adjusted after 2026 using a cost-of-living adjustment with calendar year 2025 as the base), to be allocated among tribes by the Treasury Secretary; (2) an exemption from the geographic equity restriction of IRC §146(k)(1) to the extent the national cap finances facilities on qualified Indian lands (i.e., tribal lands, fee simple lands held by tribes, certain Alaska Native Claims Settlement Act lands, Hawaiian Home Lands, and related lands or infrastructure); and (3) a prohibition on using bond proceeds to finance class II or class III gaming facilities under the Indian Gaming Regulatory Act. It further authorizes intertribal consortia and certain Alaska Native entities to issue bonds on behalf of tribes and makes conforming amendments to IRC §§45(c)(9) and 7871(a). This section also creates a separate national limitation of $45 million for calendar year 2026 on tax-exempt economic development bonds issued by Alaska Native Corporations (inflation-adjusted after 2026 using a cost-of-living adjustment with calendar year 2025 as the base). (Thus, these changes treat tribes more like states for tax-exempt bond issuance, enabling lower-cost borrowing for economic development without state volume cap allocations or function tests.)

This section amends the Internal Revenue Code to treat pension and employee benefit plans maintained by Indian tribal governments (and their agencies, instrumentalities, subdivisions, or wholly owned entities) as governmental plans for tax purposes. Specifically, it (1) expands the definition of qualified public safety employee under IRC §72(t)(10)(B)(i) to include employees of Indian tribal governments (previously limited to state or political subdivision employees); (2) revises the definition of governmental plan under IRC §414(d) to explicitly include such tribal plans; (3) expands exempt governmental deferred compensation plans under IRC §3121(v)(3) to include those maintained by tribal governments; (4) adds new IRC §457(h) to grandfather preexisting tribal deferred compensation plans compliant with prior law, allowing them to continue or be amended for compliance; and (5) exempts governmental plans (now including tribal plans) from long-term part-time worker standards under IRC §401(k)(15)(C). (Governmental plans generally are exempt from many Employee Retirement Income Security Act requirements and receive favorable tax treatment.) The section further imposes a moratorium on federal enforcement actions against tribal governments based solely on Pension Protection Act of 2006 amendments to the tax code or ERISA for periods before Treasury or Labor Department regulations are published (requiring consultation with the Tribal Advisory Committee and tribal governments). Finally, the section adds new IRC §7531 establishing uniform protections and fiduciary standards for tribal pension plans (i.e., qualified employer retirement plans maintained by tribal governments), including personal liability for fiduciary breaches, prohibitions on discrimination against participants, and nondiscrimination requirements for contributions and benefits.

This section expands the definition of governmental unit under the Internal Revenue Code to include Indian tribal governments, their agencies, instrumentalities, subdivisions, or entities wholly owned or controlled by them (1) for purposes of the 50% charitable contribution deduction limit and (2) as qualifying organizations eligible to receive support from supporting organizations exempt from private foundation rules. (Thus, qualifying tribal foundations and charities receive public charity tax treatment equivalent to those of other governments, including higher deduction limits for donors and avoidance of private foundation excise taxes and restrictions.) The amendments apply to taxable years beginning after enactment.

This section extends federal tax refund offset procedures for past-due child support (42 U.S.C. 664)—under which the Treasury Department withholds refunds payable to individuals owing such support and transfers the amounts to state child support agencies—to Indian tribes and tribal organizations eligible for child support enforcement grants (i.e., under SSA section 455(f)). It does so (1) by adding a new SSA section 464(d) to apply the procedures to such tribes in the same manner as to states, except for distribution requirements under section 457; and (2) by amending IRC section 6402(c) to treat such tribes as states for purposes of the offset authority. (Thus, tribal child support agencies may notify Treasury of past-due support owed by named individuals and receive withheld tax refunds, excluding section 457 distribution rules.)

This section recognizes Indian tribal governments, in addition to states, for purposes of determining whether a child has special needs under the adoption tax credit. (Thus, adoptions of such children qualify for the maximum credit amount regardless of qualified expenses.) The amendments apply to taxable years beginning after the date of enactment.

This section establishes an additional annual new markets tax credit (NMTC) limitation of $175 million for qualified tribal area investments beginning in calendar years after 2025 (in addition to the general NMTC limitation under IRC §45D(f)(1)). (As background, the NMTC provides investors in qualified community development entities with a tax credit equal to 39% of qualified equity investments over seven years, to encourage capital deployment in low-income communities.) The section (1) restricts such allocations to qualified tribal area investments (i.e., capital/equity investments or loans to qualified active tribal community businesses located in tribal statistical areas; purchases of such loans; specified financial counseling/services; or investments in CDEs substantially all of whose proceeds fund such tribal investments); (2) defines qualified active tribal community business by reference to the existing qualified active low-income community business standard, substituting "tribal statistical area" for "low-income community," and including certain low-income community businesses serving tribal, Alaska Native village, or Native Hawaiian populations with certification from relevant tribal governments or the Department of Hawaiian Home Lands; (3) defines tribal statistical area as a low-income community in a Tribal Census Tract, Oklahoma Tribal Statistical Area, Tribal-Designated Statistical Area, Alaska Native Village Statistical Area, or Hawaiian Home Lands; (4) provides for carryover of unused tribal limitation amounts to the next five calendar years, after which excess transfers to the general NMTC limitation; and (5) requires separate allocation processes and substantially all proceeds used for tribal investments. The section further directs the Secretary of the Treasury, not later than 180 days after enactment and after consultation with the Office of Tribal and Indian Affairs, to provide education and technical assistance related to tribal statistical area investments (with the existing subsection (i) redesignated as (j)).

This section amends the low-income housing tax credit (LIHTC) provisions of the Internal Revenue Code to designate Indian areas (as defined in section 4(11) of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA; 25 U.S.C. 4103(11))) as difficult development areas (DDAs). The designation applies to buildings placed in service after December 31, 2025, and limits DDA eligibility in Indian areas to buildings assisted or financed under NAHASDA (25 U.S.C. 4101 et seq.) or with a project sponsor that is an Indian tribe (as defined in IRC §45A(c)(6)), tribally designated housing entity (TDHE; 25 U.S.C. 4103(22)), or wholly owned or controlled by such tribe or TDHE. (Thus, qualifying projects receive preferential consideration by state housing credit agencies when allocating the state's annual LIHTC ceiling.)

This section excludes from unearned income for Supplemental Security Income (SSI) purposes any Indian general welfare benefit (as defined in section 139E of the Internal Revenue Code of 1986). It further excludes from SSI resources (1) such benefits for the nine-month period beginning after the month received and (2) any grantor trust established by an Indian tribe for the benefit of Indians for which the tribe is the grantor (as defined in IRC regulations). (SSI provides monthly cash benefits to low-income aged, blind, or disabled individuals, with eligibility limited by countable income and resources.)

This section (1) extends the Indian employment tax credit indefinitely by striking the termination provision, (2) modifies the credit base under IRC §45A(a)(2) to the average of qualified wages and qualified employee health insurance costs paid or incurred during the two most recent calendar years ending before the taxable year, and (3) increases the per-qualified-employee limitation to $30,000 (from $20,000). The Indian employment tax credit equals 20% of such qualified wages and health insurance costs paid by an employer for employees employed on an Indian reservation. The amendments apply to taxable years beginning after December 31, 2025.

This section expands the exclusion from gross income for student loan repayments to certain health professionals under IRC §108(f)(4) to include payments under the Indian Health Service loan repayment program (i.e., sec. 108 of the Indian Health Care Improvement Act). The exclusion applies to payments made after the date of enactment.

This section expands the exclusions from gross income under IRC §117(c)(2) for qualified scholarships by adding amounts received under the Indian Health Professions Scholarships Program (i.e., scholarships for American Indians and Alaska Natives pursuing health professions careers, with a service payback obligation in Indian health programs). The exclusion applies to amounts received in taxable years beginning after December 31, 2025.