The LIFT Act creates a new federal tax credit to help local governments and other bond issuers finance infrastructure projects at lower cost. Under the bill, issuers of "American infrastructure bonds" used for capital projects like roads, bridges, and public facilities would receive direct payments from the federal government equal to a percentage of the interest they pay on those bonds. The credit percentage starts at 42 percent for bonds issued between 2024 and 2028, then gradually decreases to 30 percent by 2031 and beyond. The legislation also modifies rules for advance refunding of bonds and increases the threshold for small bond issuers to borrow tax-exempt funds, raising the limit from $10 million to $30 million with annual inflation adjustments. Projects financed through these bonds must comply with prevailing wage requirements under federal law, and the bill applies to bonds issued more than 30 days after it becomes law.
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