Modernizing Agricultural and Manufacturing Bonds Act
- Bill Number
- S. 2100
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-01-14: Committee on Small Business and Entrepreneurship. Hearings held.
- Last Updated
- 2026-06-05T15:43:56Z
AI-Generated Summary
Purpose The legislation, titled the Modernizing Agricultural and Manufacturing Bonds Act, aims to update tax rules governing certain tax-exempt bonds used to finance manufacturing facilities and agricultural land purchases. It seeks to modernize definitions and increase dollar limits to support small businesses and first-time farmers.
Key Provisions
- Manufacturing Bond Changes: Expands the definition of a "manufacturing facility" under section 144(a)(12) of the Internal Revenue Code to include facilities producing intangible property (as defined in section 197(d)(1)(C)(iii)) and certain functionally related or ancillary facilities on the same site, subject to a 25% limit on bond proceeds.
- Limit Increases for Manufacturing Bonds: Raises the per-issuance cap from $10 million to $30 million, the aggregate limit per taxpayer from $40 million to $120 million, and adjusts related capital expenditure rules. Introduces inflation adjustments starting in 2025, rounded to the nearest $100,000.
- Farmer Bond Changes: Increases the dollar limit for first-time farmer exceptions to private activity bond rules from $450,000 to $1 million, repeals a separate lower limit on used farm equipment, and conforms the small issue bond limit to $1 million. Changes the test for "substantial farmland" from median to average farm size. Adds inflation adjustments starting in 2026, rounded to the nearest $10,000.
- Effective Dates: Manufacturing changes apply to bonds issued after enactment; farmer changes apply to bonds issued after December 31, 2025. Refunding rules protect pre-enactment bonds.
Significant Changes to Existing Law
- Broadens the scope of qualified small issue manufacturing bonds beyond tangible property production.
- Substantially raises all dollar thresholds and introduces automatic inflation indexing.
- Simplifies farmer-related exceptions by eliminating the used equipment distinction and updating the farmland size metric.
- These amendments modify sections 144 and 147 of the Internal Revenue Code of 1986.
Potential Impacts
- On Government Agencies: May increase administrative workload for the Internal Revenue Service in reviewing expanded bond issuances and inflation adjustments. State and local issuers could see higher volumes of tax-exempt bond activity.
- On Citizens: Could facilitate greater access to financing for small manufacturers and first-time farmers by allowing larger tax-exempt bond amounts.
- On International Relations: No direct effects identified in the legislation.
Main Stakeholders Affected
- Small manufacturing businesses and their lenders.
- First-time farmers and agricultural lenders.
- State and local governments that issue private activity bonds.
- Tax-exempt bond investors and the Internal Revenue Service.
Notable Legal, Constitutional, or Political Implications
- The changes operate within existing tax-exempt bond frameworks under the Internal Revenue Code and do not alter constitutional allocations of taxing power.
- No new federal mandates on states are created; impacts remain voluntary through bond issuance decisions.
- The legislation maintains prior refunding protections to avoid retroactive effects on existing bonds.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Sen. Warner, Mark R. [D-VA], Sen. Hyde-Smith, Cindy [R-MS]
Recent Actions
- 2026-01-14: Committee on Small Business and Entrepreneurship. Hearings held.
- 2025-06-17: Read twice and referred to the Committee on Finance.
- 2025-06-17: Introduced in Senate
Bill Versions
- Modernizing Agricultural and Manufacturing Bonds Act — issued 2025-06-17 — PDF (7 pages)