In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA)—a sweeping reform of the U.S. tax code that included a number of permanent changes as well as other provisions set to expire at the end of Calendar Year 2025. The process leading up to the passage of TCJA included various threats to the tax-exempt municipal market. A version of the bill that passed the House of Representatives even included a widespread repeal of the tax exemption for qualified private activity bonds (PABs). The final enacted bill repealed the tax exemption for advanced refunding bonds. 

Regardless of the outcome of the 2024 elections, municipal market participants have recognized the high potential for legislative action on tax reform in 2025 and—more specifically—the potential for threats to the tax exemption on municipal bonds to reemerge. NABL and other municipal market groups have launched an array of advocacy resources to enable and encourage market participants to advocate early and often for tax-exempt municipal bonds.

As the process to address looming TCJA expirations unfolds this year, developments will likely come piecemeal and through both formal and informal channels. In order to help NABL members stay on top of these developments we have created and will maintain this tracker to organize important updates chronologically. NABL members will receive urgent updates via “NABL Alert” emails.

Timeline of Updates

January | February | March | April | May

[New Updates]

May

April

• [4/30/2025] Transportation and Infrastructure Markup: The House Committee on Transportation and Infrastructure (T&I) held markup on and advanced its contributions to the House’s reconciliation package. As proposed, the legislation would reduce the federal deficit by $10 billion over the next 10 years, make a series of increased investments to the Coast Guard and air traffic controllers network, rescind a host of funding streams authorized under IRA, and impose an annual car registration fee of $250 for electric and $100 for hybrid vehicles. The markup notably scrapped a plan to impose a $20 annual vehicle registration fee that had initially been proposed by the committee. Committee Information >
• [4/30/2025] Financial Services Markup: The House Committee on Financial Services held markup on and advanced its contributions to the House’s reconciliation package. As proposed, the legislation would reduce the federal deficit by $1 billion over the next 10 years, fold the Public Company Accounting Oversight Board (PCAOB) under the SEC, substantially cut funding to the Consumer Financial Protection Bureau (CFPB), rescinds certain funding for the Department of Housing and Urban Development (HUD) authorized under the Inflation Reduction Act (IRA), and a host of other changes in the financial services and consumer protection space. Committee Information >
• [4/29/2025] Johnson Signals W&M Markup Next Week: Speaker Mike Johnson (R-LA) told reporters that he expects the House Ways and Means Committee, which has jurisdiction over the tax code, to markup and vote on its portion of the reconciliation package next week. Various other committees began work on their aspects of the large forthcoming package, but the Ways and Means Committee has reportedly been waiting to conduct its process until it knows the outcome of work conducted by other committees. To date, no legislative text proposals have been made public from the Ways and Means Committee.
• [4/28/2025] Markup Begins: Various House Committees begin markup on their contributions to a larger package. Notably, the House Ways and Means Committee is not expected to begin public markup work on their portion of the bill until the following week.

• [4/14/2025] HFSC Letter in Support of Munis: Republican leaders on the House Financial Services Committee send a letter (dated April 10, 2025) in support of preserving tax-exempt municipal bonds to the leadership of the Ways and Means Committee.

• [4/10/2025] House Passes Revised Senate Budget Resolution: Two House Republicans joined all the Democrats in voting against the measure, which ultimately prevailed with the support of the remainder of House Republicans in a 216 to 214 vote.
• [4/5/2025] Senate Passes Budget Resolution: Early on Saturday morning, the Senate voted along party lines (51 to 48) to adopt the budget resolution outlined immediately below.
• [4/2/2025] Senate Unveils New Budget Blueprint: The Senate Committee on Budget unveiled a new budget resolution that moves the Senate’s starting reconciliation salvo closer in line to the House but demonstrates continued differences between the two chambers. View Second Proposed Senate Budget Resolution >
  • What’s In the Resolution: The resolution brings the Senate’s proposed plan closer inline to those in the House, but it continues to deviate from the House version in some potentially significant ways. It provides for a $5 trillion increase to the federal debt; instructs Committees to aim for $1.5 trillion in cuts to federal expenditures; but notably sets a deficit reduction floor for Committees of a few billion dollars.
  • “Current Policy” vs. “Current Law”: The Senate’s second resolution relies on a method of accounting for the cost of TCJA extensions known as “current policy” baseline, which allows the cost estimation of any forthcoming reconciliation package to assume expiring TCJA provisions exist in perpetuity when considering the baseline. The move essentially allows the Senate to project that the cost of further TCJA extensions will not materially increase the federal government’s tax expenditures and would greatly reduce pressure to find revenue offsets to pay for such extensions. It remains a significant difference from the House budget resolution, which relies on “current law” baseline and assumes extending expiring TCJA provisions, which expire on December 31, 2025 absent legislation, will increase federal expenditures for the purpose of accounting the cost of a forthcoming reconciliation package.
  • Next Steps: The Senate could begin the process on voting on the package as soon as Thursday, April 3. A Senate vote on the package by week’s end would possibly allow the House to clear it before Congress adjourns for a two week Easter recess. Speaker Johnson has reiterated his desire to deliver a final package to the President for signature by Memorial Day, but many uncertainties remain that could drag the reconciliation debate through the summer and into fall.

March

• [3/26/2025] CBO: X-Date Likely in August/September: The Congressional Budget Office (CBO) released its estimate that “if the debt limit remains unchanged, the government’s ability to borrow using established ‘extraordinary measures’ will probably be exhausted in August or September 2025.” Read CBO Report >

February

• [2/25/2025] House Passes Budget Resolution: Late in the evening on Tuesday, February 25, the House of Representatives passed its version of a budget resolution. This version of the budget resolution differs from a resolution that passed the Senate last week.
  • What is in the Resolution: The House resolution establishes a federal budget for FY2025, sets budgetary levels for the federal government for FY2026-2034, and provides instructions to specific Committees to begin working on a forthcoming budget reconciliation package that would reconcile federal revenues and expenditures to reach these budgetary levels. Those instructions direct the Ways and Means Committee to increase the federal expenditures over such time by no more than $4.5 trillion. This deficit threshold is to be reduced proportionally in the event that Committees, including the Committee on Ways and Means, fail to enact offsets that reduce that deficit by at least $2 trillion.
  • What It Means in General: House Republicans plan to use this budget resolution to begin a budget reconciliation process that seeks to increase federal expenditures, which would include outlays and tax expenditures, by $4.5 trillion and reduce federal spending or increase revenues by $2 trillion. This subsequent reconciliation bill would aim to address the majority of the Republican party’s economic agenda—including extension and modification of select expiring provisions of the TCJA, other tax priorities, increased spending on national and border security, and addressing the pending U.S. federal government debt ceiling.
  • Next Steps: Both the House and Senate must pass identical budget resolutions for both chambers to commence work on a reconciliation package. It seems likely that the Senate will now shift toward the House’s strategy to advance their economic agenda via one large bill instead of two separate ones. Members of Congress, however, will likely need to iron out remaining substantive differences across the chambers via either a formal conference committee or an informal pre-conference process. Once both chambers agree to a budget resolution, we will likely see the House take a lead start in suggesting and vetting specific policy proposals consistent with and seeking to accomplish the goals set forth in the budget resolution. The process of reconciliation is rather rigid and involves a number of steps.
  • What It Means for the Municipal Market: At this time, Republicans are still aiming to use this budget reconciliation process to address the debt ceiling. In theory, the process would need to conclude before the approach of the debt ceiling x-date, which is likely some time in or around May. This week’s vote represents a significant advance in the Republican effort to address the expirations of the TCJA in the first half of this year. While this plan is ambitious, municipal market participants should prepare for developments to occur along this timeline. Despite inclusion on the House Budget Committee’s “Menu of Options,” the tax exemption continues to enjoy broad bipartisan support, and we have heard minimal threats to the tax-exempt status of municipal bonds from congressional offices. It is worth noting, however, that details surrounding offsets and revenue raisers will likely only manifest after both chambers pass identical budget resolutions and the elimination or reduction of the tax exemption for municipal bonds remains a potential option for negotiators. Municipal market participants should continue to advocate on behalf of the tax exemption.

• [2/20/2025] Senate Advances Budget Resolution: The full Senate voted 52 to 48 to advance the chamber’s version of a budget resolution.
• [2/19/2025] Trump Backs House Approach: After previously maintaining no affirmative preference on whether his economic agenda was advanced via one or two reconciliation packages, President Trump threw his support behind the House budget resolution in a Truth Social post. The move surprised Senate leadership who spent the week working to advance their own budget resolution that would lay the groundwork for a two bill approach. Vice President JD Vance later told negotiators that while the President preferred a single bill approach, the White House understood the need for a backup approach to advance as well.

• [2/13/2025] House Advances Budget Resolution: The House Budget Committee voted to advance its version of a budget resolution along party lines. Leaders of the House Freedom Caucus endorsed the package after striking an agreement that would effective limit the amount of tax cuts allowed in a forthcoming package if negotiators are unable to reach $2 trillion in spending cuts.
• [2/12/2025] House Unveils Competing Budget Resolution: In response to the Senate’s shift toward working on its own budget resolution, House leadership released their own version that seeks to tee up one forthcoming large reconciliation package. Unlike the proposal in the Senate, the House package would seek to tackle most of President Trump’s economic agenda, including expirations of the TCJA, in one singular reconciliation package. It would:
  • Raise the debt ceiling by $4 trillion, which would effectively punt the next debt ceiling by an estimated two years
  • Provide for $4.5 trillion worth of tax cuts and additional spending;
  • Provide for $300 billion of new defense and border security spending;
  • And, instruct negotiators to cut at least $1.5 trillion in other expenses.
• [2/12/2025] Senate Budget Committee Advances Resolution: After holding a markup of the budget blueprint released the week prior, the Senate Committee on Budget voted along party lines to advance the measure on to a floor vote.
• [2/7/2025] Senate Releases Budget Resolution: Coming out of a convening in Mar A Lago, the Senate Budget Committee Chairman, Lindsey Graham (R-SC), released his chamber’s budget resolution framework. Graham announced that the Senate Budget Committee would debate the blueprint next Wednesday and Thursday with a possible vote on the measure in the second half of next week. The Senate’s move comes as the House continues to work toward finding consensus on their chamber’s blueprint. The Senate’s blueprint is more limited in scope than what the House is expected to produce. It would authorize $85.5 billion in new annual spending to support investments in border security, national security, and domestic energy production.
• [2/6/2025] Trump Outlines Tax Reform Priorities: During a meeting with Senators at Mar A Lago, President Trump outlined his priorities for a forthcoming tax package. Information provided to the media about the meeting specifically referenced the President’s desire to “eliminate all the special tax breaks for billionaire sports teams owners.” Read More from Politico >
• [2/6/2025] Key Senators Want to Advance Their Own Budget Resolution: Senate Budget Committee Chairman Lindsey Graham (R-SC) announced this week that his chamber will attempt to advance its own version of a budget resolution, teeing up a process for the Senate to move before the House on a budget reconciliation package. Unlike the House, the Senate has favored advancing their priorities via two bills: a preliminary package to address immigration and energy, and a second one to address expirations of the TCJA later in the year.
• [2/4/2025] Higher Ed “Menu” Options: A new document was released, entitled “Possible Reconciliation Revenue Options Affecting Higher Education.” The document appears to be a reiteration of the earlier “Menu” of options with only specific line items related to higher education in America. It lists “Eliminate Exclusion of Interest on State and Local Bonds,” but does not include the bullet discussing the tax exemption on all other bonds, which would presumably include qualified 501(c)(3) bonds.

January

• [1/31/2025] PFN Letter to Congress: The Public Finance Network (PFN), including NABL, submits a letter to members of the 119th Congress in support of the tax exemption on municipal bonds. Read Letter >
• [1/17/2025] House “Menu” of Options: POLITICO published a document released from the House Budget Committee that appears to list 50 pages of potential revenue raisers that could pay for at least part of a large reconciliation bill later this year. The list appears to be a basis for discussion rather than concrete proposals that have achieved broad consensus from committee members. It is a large list of potential revenue raising options, extending far beyond the realm of tax. Although many of the options are likely unviable and specifics remain ambiguous, the document does represent the first written document from this Congress suggesting to alter the tax-exempt status of interest on municipal bonds. It also further validates the early advocacy work by municipal market groups such as NABL and illuminates the need for market participants to advocate early and often for tax-exempt municipal bonds. Some of the listed options include changing existing law to:
  • Eliminate exclusion of interest on state and local bonds;
  • End tax preferences for “other bonds” (with a note indicating that this means “private activity bonds and Build America Bonds”);
  • Eliminate “nonprofit status” for hospitals;
  • Expand taxes on large college endowments;
  • Advance other proposals relating to entitlement reforms, the state and local tax (SALT) deduction, and other development tax incentives.