LOCAL Infrastructure Act

Bill Number

S. 1481

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-04-10: Read twice and referred to the Committee on Finance.

Last Updated

2026-02-04T05:06:16Z

AI-Generated Summary

Purpose

The legislation, titled the "Lifting Our Communities through Advance Liquidity for Infrastructure Act" (LOCAL Infrastructure Act), aims to restore the ability of state and local governments to issue advance refunding bonds. These are tax-exempt bonds used to refinance existing debt early, typically to secure lower interest rates and free up funds for infrastructure projects like roads, schools, and utilities.

Key Provisions

• Repeal of Prior Ban: The bill repeals the amendments introduced by Section 13532 of Public Law 115-97 (the Tax Cuts and Jobs Act of 2017), which had prohibited the issuance of tax-exempt advance refunding bonds.
• Restoration of Prior Law: This restores the pre-2017 rules under the Internal Revenue Code of 1986, allowing governments to issue these bonds again without tax penalties.
• Effective Date: The changes take effect immediately upon the bill's enactment into law.

Significant Changes to Existing Law

• The 2017 tax law banned advance refunding bonds to simplify the tax code and reduce federal revenue losses from tax-exempt interest. This bill reverses that ban, reinstating the option for early refinancing of municipal debt.
• No new restrictions or conditions are added; it simply reverts to the previous framework, where such bonds could be issued up to 90 days before the callable date of the original bonds.

Potential Impacts

• On Government Agencies: State and local governments will gain flexibility to refinance high-interest debt at lower rates, potentially saving billions in interest costs over time. This could accelerate infrastructure investments without raising taxes.
• On Citizens: Taxpayers in affected communities may benefit from improved public services and lower borrowing costs for local projects, though federal tax revenues could see a minor decrease due to more tax-exempt bond interest.
• On International Relations: No direct impacts, as this is a domestic tax policy focused on U.S. municipal finance.

Main Stakeholders Affected

• State and Local Governments: Primary beneficiaries, as they issue most municipal bonds for public works.
• Bond Investors and Financial Institutions: Gain opportunities to underwrite and invest in these bonds, which are considered low-risk due to their tax-exempt status.
• Taxpayers and Residents: Indirectly affected through potential savings on public debt and enhanced infrastructure funding.
• Federal Government: Experiences a small fiscal cost from reduced taxable interest income but supports broader economic goals like infrastructure development.

Notable Legal, Constitutional, or Political Implications

• Legal: This is a straightforward tax code amendment with no anticipated constitutional challenges, as it deals with congressional authority over federal taxation (Article I, Section 8 of the U.S. Constitution). It aligns with existing precedents on tax-exempt municipal bonds.
• Political: The bill has bipartisan support (introduced by senators from both parties), reflecting a push to ease fiscal pressures on local governments amid rising infrastructure needs. It could influence future tax reform debates by highlighting the trade-offs between tax simplification and public finance tools, potentially increasing federal deficits slightly (estimated at under $20 billion over 10 years by similar analyses).

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Wicker, Roger F. [R-MS]

Cosponsors (13)

Sen. Bennet, Michael F. [D-CO], Sen. Britt, Katie Boyd [R-AL], Sen. Hyde-Smith, Cindy [R-MS], Sen. Boozman, John [R-AR], Sen. Barrasso, John [R-WY], Sen. Warnock, Raphael G. [D-GA], Sen. Warner, Mark R. [D-VA], Sen. Capito, Shelley Moore [R-WV], Sen. Welch, Peter [D-VT], Sen. Baldwin, Tammy [D-WI], Sen. Blumenthal, Richard [D-CT], Sen. Klobuchar, Amy [D-MN], Sen. Van Hollen, Chris [D-MD]

Recent Actions

• 2025-04-10: Read twice and referred to the Committee on Finance.
• 2025-04-10: Introduced in Senate

Bill Versions

• Lifting Our Communities through Advance Liquidity for Infrastructure Act — issued 2025-04-10 — PDF (2 pages)