Sponsor
Terri Sewell
Representative · D-AL
Representative · D-AL
Creates a refundable interest credit for qualifying infrastructure bonds, revises refunding rules, and raises/indexes the small-issuer exception to $30M.
Official title: To amend the Internal Revenue Code of 1986 to provide a credit for American infrastructure bonds, and for other purposes.
Introduced May 15, 2026 by Terri Sewell · Last progress May 15, 2026
The bill helps state/local governments and nonprofits finance and refinance projects (and raises construction wages) by providing refundable credits and clearer refunding rules, but does so at the cost of higher federal spending and reduced tax revenue, tighter cash‑management rules, and increased compliance and administrative burdens that may raise borrowing and project costs.
State and local governments can receive a refundable federal credit that lowers net borrowing costs for infrastructure projects, making some public projects cheaper to finance.
Construction workers on funded projects benefit from Davis‑Bacon prevailing‑wage protections, raising wage standards on projects financed under the program.
State and local issuers gain clearer and more specific rules about when refundings count as advance refundings and can (under conditions) refinance existing debt at a defined applicable percentage, reducing legal uncertainty and enabling some current refundings.
Taxpayers will likely face increased federal outlays to fund refundable credits for bond issuers, raising federal budgetary costs.
Taxpayers may also lose revenue over time because the small‑issuer exception is raised to $30M and indexed for inflation, expanding the tax‑exempt base and reducing future federal receipts.
State and local governments (and the projects they fund) may see higher labor costs because Davis‑Bacon prevailing‑wage requirements increase construction wages, potentially reducing the amount of work financed per dollar.
Based on analysis of 4 sections of legislative text.
Creates a new refundable federal tax credit for issuers of qualifying "American infrastructure bonds" to subsidize interest payments, changes refunding and advance-refunding bond rules, and raises and indexes the small-issuer exception threshold for certain tax rules to $30 million. It requires Davis-Bacon prevailing wages on projects financed with bond proceeds, updates technical tax-code cross-references, and becomes effective for obligations issued more than 30 days after enactment (with some amendments effective immediately for obligations issued after enactment).