Changes federal tax rules for bonds issued by state or local governments labeled as “sanctuary jurisdictions.” It defines what counts as a sanctuary jurisdiction and directs the Treasury Department, after consulting the Department of Homeland Security, to publish a list of these jurisdictions.

The new rules apply to bonds issued after enactment and to taxable years ending after enactment. This targets the tax treatment of those bonds and could affect borrowing costs for listed governments and after‑tax returns for investors who hold their bonds.