S. 2100 — Modernizing Agricultural and Manufacturing Bonds Act

This section expands the definition of manufacturing facility for qualified small issue bonds—tax-exempt private activity bonds that finance manufacturing without consuming a state's annual volume cap—to include (1) facilities used in creating or producing specified intangible property (i.e., computer software), (2) facilities functionally related and subordinate to a manufacturing facility if on the same site, and (3) directly related and ancillary facilities on the same site if not more than 25% of net proceeds finance them (subject to an office space limitation similar to that for exempt facilities and inapplicable to pre-enactment bonds or certain refundings thereof). It further (1) increases the small issue limitation to $30 million (from $10 million), (2) sets at $30 million the additional capital expenditures exclusion for bonds issued after enactment, and (3) raises the aggregate per-taxpayer limit to $120 million (from $40 million). Finally, it establishes inflation adjustments for these amounts after 2025, using a cost-of-living adjustment based on calendar year 2024 and rounded to the nearest $100,000. The changes apply to obligations issued after enactment.

This section expands exceptions to the private activity bond state volume cap for first-time farmers—allowing tax-exempt financing for land, equipment, and structures without counting against the cap—effective for bonds issued after December 31, 2025, by (1) increasing the per-farmer dollar limitation to $1 million (from $450,000); (2) repealing the separate lower dollar limitation on used farm equipment; (3) increasing the qualified small-issue bond limitation to $1 million (from $250,000); (4) providing for inflation adjustment of both dollar amounts after 2026 (base year 2025, rounded to nearest $10,000); and (5) changing the substantial farmland test from median to average farm size in the county.