The Financing Lead Out of Water Act of 2025 modifies federal tax law to make it easier for communities to finance the replacement of lead service lines in drinking water systems. Specifically, the bill clarifies that when local governments issue tax-exempt bonds to replace lead pipes—particularly the privately-owned portions connecting homes to public water systems—these projects won't be classified as "private business use," which would otherwise disqualify the bonds from tax-exempt status. This change allows public water systems to raise money more affordably by issuing bonds to help property owners replace dangerous lead lines and comply with federal drinking water safety standards. The bill applies to bonds issued after December 31, 2025, and covers lead service line replacement work across all public water systems nationwide, making it more practical and cost-effective for communities to address this significant public health issue.
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