No Tax Breaks for Sanctuary Cities Act

Summary

Denies tax-exempt status for interest on bonds issued by any state or local government that qualifies as a “sanctuary jurisdiction” under the bill’s definition. The Treasury Secretary, after consulting DHS, must publish and update a list of such jurisdictions, and the rule applies to bonds issued and taxable years ending after the law takes effect.

• Removes federal tax-exempt status for interest on bonds issued by jurisdictions defined as "sanctuary jurisdictions."
• Defines "sanctuary jurisdiction" by local rules that restrict sharing immigration-status information or complying with DHS detainer/notification requests.
• Treasury, after consulting DHS, must publish a list of affected jurisdictions within 180 days and update it annually.
• Applies only to bonds issued after enactment and to taxable years ending after enactment; existing bonds remain unaffected.
• Likely increases borrowing costs for designated jurisdictions by making their debt taxable to investors.
• Shifts administrative duties to Treasury (with DHS input) to identify and list jurisdictions.
• No direct federal spending or new federal programs are created by the bill.
• Creates potential legal and federal–local tensions over immigration policy and federal tax conditions.