Congress restores municipal bond tool to cut local borrowing costs
S. 1481 — LOCAL Infrastructure Act · Filed by Roger Wicker (R-MS) · 13 cosponsors · Introduced Apr 10, 2025 · Referred to committee
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What it does
This bill repeals a 2017 tax law change that eliminated advance refunding bonds—a financing tool that allowed state and local governments to refinance existing debt at lower interest rates. By repealing that change, the bill restores the ability of municipalities to issue advance refunding bonds, potentially lowering borrowing costs for infrastructure projects and reducing the long-term debt burden on state and local budgets.
Why we flagged it
The bill's sole operative mechanism is to restore a financing tool for state and local governments by repealing a 2017 prohibition. It is a straightforward restoration of prior law, not a new regulatory regime or carve-out.
What the text implies
- Restoring advance refunding bonds may increase the volume of municipal bond issuance, potentially affecting the municipal bond market and the tax-exempt bond ecosystem.
- The restored tool may disproportionately benefit wealthier municipalities with stronger credit ratings and existing debt, as they are more likely to refinance.
The full analysis lists 3 implications of this text.
Who stands to gain
state and local governments; municipal bond underwriters; bond investors (tax-exempt income)