Sponsors (16)
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Denies tax-exempt status for bonds issued by any State or local government that meets the bill's definition of a “sanctuary jurisdiction.” The Treasury Secretary, after consulting with DHS, must publish a list of such jurisdictions within 180 days and update it annually. The change applies to obligations issued after enactment for taxable years ending after enactment.
The bill leverages municipal bond tax treatment to pressure jurisdictions to cooperate with federal immigration enforcement—potentially improving coordination and compliance but likely raising local borrowing costs, politicizing the tax code, and undermining immigrant privacy and trust.
Taxpayers and municipal bond investors: the bill creates a financial incentive for jurisdictions to cooperate with federal immigration authorities by reducing tax benefits for bonds of non-compliant jurisdictions, which could increase local compliance with federal immigration law.
Residents and local/state governments: the threat of designation may prompt changes to policies that limit cooperation with federal immigration authorities, which proponents say could improve public-safety coordination between federal and local agencies.
State and local governments, residents, and taxpayers: designated jurisdictions could lose municipal bond tax-exempt status, raising borrowing costs and lowering after-tax returns for investors, which would make financing schools, roads, and other public projects more expensive and could reduce services or raise local taxes.
State and local governments: giving the Treasury (after consulting DHS) authority to label jurisdictions could politicize the tax code and trigger legal disputes over designation criteria and due process.
Immigrants and communities: jurisdictions that alter record-sharing or detention-notification practices to avoid designation may undermine immigrant privacy and trust in public services, reducing cooperation with law enforcement and access to services.
Introduced March 5, 2025 by Nancy Mace · Last progress March 5, 2025