American Infrastructure Bonds Act of 2025

Payments for infrastructure bond issuers

If enacted, the bill would give issuers a cash credit equal to 28% of each interest payment on qualifying American infrastructure bonds. The credit would be paid at the same time as each interest payment to the issuer or to a person who pays interest for the issuer. Bonds must be issued after enactment, be tax-exempt under current law (section 103) absent this rule, not be private activity bonds, and the issuer must make an irrevocable election. Bonds with more than a de minimis issue premium would not qualify. Interest on these bonds would be includible in federal gross income. For arbitrage rules, the bond yield would be reduced by the credit, except when calculating gross proceeds that qualify as required reserve or replacement funds. If sequestration reduces a payment, the bill would increase the payment to restore the pre-sequestration level using a specified recovery factor. Unless a State acts after enactment, States would treat the interest and the credit as exempt for State income tax. The Treasury Secretary could issue regulations and guidance to implement the credit.