The Local Taxpayer Protection Act of 2026 directs the Department of Homeland Security to establish a grant program for municipalities that host Immigration and Customs Enforcement (ICE) processing or detention facilities. Municipalities eligible for grants can receive funding up to the amount of lost property tax revenue and public utility costs incurred due to the facility's presence, covering water, electricity, sewer, internet, and other utilities. Grants are awarded for five-year terms with the option for municipalities to renew them for as long as the facility operates in their jurisdiction. To apply, municipalities must demonstrate financial need, analyze costs and benefits, and disclose other federal funding sources they have received for similar purposes. The bill encourages municipalities to apply jointly or regionally and requires ICE facilities to become self-sufficient in their utility usage or have local utility systems expanded to accommodate them.