Budget & Taxes (Debt & Bonds)

HR 2660 exempts certain student loan bonds issued by state or local governments from two tax restrictions: the federal volume cap (which limits bond issuance) and the alternative minimum tax (AMT). This means states and localities can issue more of these bonds to fund student loans without hitting the volume cap limit or facing AMT calculations. The bill defines "qualified student loan bonds" as those meeting specific criteria under existing tax code, ensuring the exemption applies only to bonds directly supporting student lending. This change aims to make it easier for governments to finance student loan programs by reducing tax barriers for the bonds they issue.

This bill modifies tax rules for public school bonds to make certain financing more accessible. It allows school districts to issue bonds for building, repairing, or acquiring school facilities (with 100% of funds used for these purposes) and treat them as tax-exempt, reverting to the pre-December 2017 tax treatment. The key provision reopens a prior tax rule that had expired, enabling districts to use advance refunding bonds for school construction without triggering tax penalties. It directly affects public school districts seeking to finance physical school infrastructure through bond financing. The change applies to bonds issued after the bill's enactment date.

S 3761, the Student Loan Bond Expansion Act of 2026, modifies federal tax rules to make it easier for states and local governments to issue bonds that fund student loans. The bill exempts "qualified student loan bonds" from two key restrictions: the annual limit on tax-exempt bond issuance (volume cap) and the alternative minimum tax calculation. This change allows more such bonds to be issued without triggering these tax rules, directly benefiting state or local entities that issue these bonds to support student loan programs. The law applies to bonds issued after the bill's enactment date.

The SIFIA Act creates tax credit bonds to finance school infrastructure projects, allowing investors to claim a 25% annual tax credit based on the bond's face value. It requires projects to be net-zero energy buildings and mandates completion within six years, with school districts partnering with private developers meeting strict experience and reporting criteria. The bill allocates $10 billion total for these bonds ($2.5 billion annually), including $1 billion reserved for rural school projects. It also includes rules for bond redemption if funds aren't spent on time and sets limits on how much a single school district can borrow.

S 1480 (American Infrastructure Bonds Act of 2025) creates a tax credit for state and local governments that issue qualifying infrastructure bonds. It allows issuers to receive a 28% credit from the Treasury on each interest payment made on these bonds, paid simultaneously with the interest. The bonds must meet specific criteria: interest would normally be tax-exempt under federal law, they cannot be private activity bonds, and the issuer must elect to use this credit. This provision reduces the cost of issuing infrastructure bonds for governments, making it cheaper to finance projects like roads, bridges, and water systems.