The Federal Tax-Exempt Status of Municipal Bonds is at Risk.
Congress is considering eliminating or reducing this essential financing tool as part of the tax policy debates this year. In mid-January, a menu of pay-fors was released with the elimination of tax-exempt municipal bonds and private activity bonds both listed. As a city leader, you know how vital tax-exempt municipal bonds are for financing infrastructure projects that improve our communities.
Tax-exempt municipal bonds have been the backbone of our nation’s infrastructure for over a century.
These bonds allow cities, towns and villages to finance projects like roads, schools, police stations and utilities at lower borrowing costs. The savings from the tax-exempt status are passed directly to our communities, ensuring that local governments can stretch limited dollars further to improve the quality of life for residents.
In 2023 alone, nearly $400 billion in municipal bonds were issued, and by 2031, these bonds are expected to finance another $3 trillion in critical infrastructure.
However, previous efforts in Congress to remove or limit the tax exemption—most recently in 2017—highlight the need for continued advocacy to protect this tool.
Representative Don Bacon from Nebraska is sponsoring a Dear Colleague letter in the House urging fellow congressional members to protect the tax-exempt status of municipal bonds. Please join NLC in encouraging your Republican Member of Congress to sign on to this critical letter.
Directions
Sign in or sign up to use NLC’s drafted letter to ask your member of Congress to sign on to Rep. Bacon’s letter by Thursday, April 3. If you do not have access, it means your member of Congress has already supported the letter and no further action is needed.