A bill introduced in the U.S. House this week seeks to restore the tax exemption for advance refunding bonds that was repealed in the Tax Cuts and Jobs Act.
While the Tax Cuts and Jobs Act law preserved tax-exempt private activity bonds, the tax-exemption for advance refunding bonds expired Dec. 31, 2017. This legislation, introduced by Reps. Randy Hultgren (R-IL) and Dutch Ruppersberger (D-MD), restores the tax exemption, allowing states and local governments to take advantage of favorable interest rates to build essential infrastructure projects.
“States and local governments need flexibility for managing their finances so they can invest in infrastructure like roads, bridges, hospitals, libraries, and schools to support our communities,” Hultgren said. “In recent years, tax-exempt advance refunding bonds have saved Illinois taxpayers $80 million per year on average. Given that interest rates are expected to increase, this tool is especially important to states and local governments responsibly planning for the future.”
While facilitating the building of roads, schools, hospitals, fire and police stations, this bill will help local governments create jobs, Ruppersberger said.
“When counties can issue an advance refunding bond, it saves taxpayers billions nationwide – and an average of nearly $37 million annually here in Maryland. This can translate into lower property taxes,” he added.