NOTE:

The following article will continue to evolve as updates emerge. We will attempt to annotate when major changes and clarifications occur. It is intended to provide updates on current events and is not intended to provide legal or financial advice or counsel as to any particular situation. The National Association of Bond Lawyers (NABL) takes no responsibility for the completeness or accuracy of this material. You are encouraged to conduct independent research of original sources of authority. If you discover any errors or omissions, please direct those and any other comments to NABL.

Major Update

Senate Finance Releases Text

On the evening of June 16, Senate Finance Committee Republicans released the text of their chamber’s tax package. Like the House-passed version of the bill, it includes two provisions of direct consequence to the municipal market, and numerous others that may be of indirect interest to municipal market participants.

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 The final enacted bill repealed the tax exemption for advanced refunding bonds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.

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Proposals of Interest

As of June 16, 2025

While the exclusion of provisions that would broadly threaten tax-exempt municipal bonds preliminary drafts thus far bodes well for the municipal market, both the House and the Senate have floated and even advanced various proposals of direct and indirect consequence to the municipal market. Below is a running list of various proposals that may be of interest to municipal market participants and where they stand. While NABL does not have an official stance on many of these policies, they are likely relevant to specific sectors of the market.

The “LIHTC Fix”

The Senate Finance Committee’s text proposes modifying the tax-exempt financing requirement for the 4 percent LIHTC credit. Under current law, a project may receive credit if more than 50 percent of the project’s eligible basis is financed with a tax-exempt bond subject to a state volume cap. The Senate bill would reduce this requirement to 25 percent of the eligible basis for bonds issued after December 31, 2025. The House version similarly included this change, but only for bonds issued after December 31, 2025 and before 2030.

State and Local Tax (SALT) Deduction

The Tax Cuts and Jobs Act (TCJA) capped federal individual income tax deductions for state and local taxes at $10k per year. The House proposal would raise the cap to $40k per year for taxpayers making $500k or less per year. Taxpayers making above $500k would see a gradual phaseout out of the expanded SALT deduction. The income and deduction cap thresholds would increase automatically by 1 percent from 2026 through 2033. The Senate Finance Committee’s draft language, however, would extend the current cap. Republican leadership has noted that the cap is still the subject of ongoing debate and negotiations. Both bills also include language targeted at applying the cap more broadly to encompass payments made by select partnership and S corporations in lieu of individual taxes.

“Endowment Tax”

Both chambers propose expanding the excise tax on applicable college and university investment income (primarily endowments), albeit at differing rates across a tiered system, see the chart below. Under existing law, a 1.4 percent tax is generally applied to the investment income of institutions with more than 500 students and whose investment assets exceed $500k per student. Both bills would also amend the calculation of assets per student to exclude international and undocumented students, which could impact select schools depending on their international student body.  

HOUSE BILL

Endowment per Adj. StudentTax Rate
$500,000 – $749,9991.4%
$750,000 – $1,249,9997%
$1,250,000 – $1,999,99914%
$2,000,000+21%

SENATE PROPOSAL

Endowment per Adj. StudentTax Rate
$500,000 – $749,9991.4%
$750,000 – $1,999,9994%
$2,000,000+8%
Private Foundation Tax

Under current law, all private foundations that are exempt from taxation under IRC section 501(a) are subject to an excise tax equal to 1.39 percent of the net investment income of such foundation for the taxable year. The House bill would amend the current excise tax on net investment income framework for tax-exempt private foundations under IRC section 4940(a) with a tiered system, as follows in the chart below, while the Senate Finance draft maintains the current flat tax.

HOUSE BILL

Size of AssetsTax Rate
$0 – $49,999,9991.39%
$50,000,000 – $249,999,9992.78%
$250,000,000 – $4,999,999,9995%
$5,000,000,000+10%

SENATE PROPOSAL

Size of AssetsTax Rate
Any1.39%
Energy Tax Credits

The code contains a number of tax credits designed to encourage investment in energy facilities and ongoing energy production. The Inflation Reduction Act of 2022 further expanded a number of those credits with an emphasis on clean and renewable energy investment. Both the House and Senate bills would terminate and accelerate the sunset of a number of these energy tax credits. The Senate Finance draft, however, is largely seen as a less aggressive phaseout of these credits.

Section 501(p): Suspension of Tax-Exempt Status of Terrorist Organizations

Early iterations of the House proposed bill included changes to section 501(p) of the Code. Existing law allowed the IRS to issue a letter revoking an organization’s tax-exempt status after a set process. Proposed changes would grant the Treasury Secretary the authority to suspend an organization’s tax-exempt status if, at any point in the preceding three years, the organization provided more than a minor amount of material support or resources to a listed terrorist organization. It would also subject the Treasury Department’s ability to make such a suspension to a set of procedural and due process protection. While the proposed inclusion of the provision stirred a number of questions and concerns for the non-profit section, it was omitted from the House-passed bill in the eleventh hour and does not appear in the Senate proposal at this time.

New Markets Tax Credit (NMTC)

The Senate version of the bill would permanently authorize the New Markets Tax Credit (NMTC) program. The House bill does not address NMTC, which is set to expire after December 31, 2025 without a further extension.

Timeline of Updates

January | February | March | April | May | June

[New Updates]

June

Weekly Update: June 20, 2025

On Monday evening, the Senate Committee on Finance released text for the Senate’s version of the pending tax bill. Notably, neither the House nor Senate have thus far proposed provisions that would broadly reduce the ability of municipal issuers to issue tax-exempt municipal bonds. Learn more about various proposals of interest to the municipal market in both the House and Senate bills. 

Weekly Update: June 13, 2025

Members of the Senate continued negotiations in their efforts to resolve remaining disputes on the Republican tax bill. While Senate Republicans appear close to releasing and possibly advancing their chamber’s version of the bill, it remains unclear how far they will depart from the version of the bill that passed the House last month. Republican leadership aims to pre-conference as much of the bill as possible in order to meet their goal of landing the tax package on the President’s desk before the July Fourth holiday. They admit, however, that outstanding disagreements between the chamber could drag the process deep into July and possibly beyond.

Weekly Update: June 6, 2025

The Senate returned from recess this week to the difficult task of advancing the tax bill passed by the House last month. A number of key disagreements remain unresolved between the House and the Senate that will complicate Republican leadership’s goal of delivering the final package to the President by July 4. Changes to energy tax credits, the state and local tax deduction, and Medicaid are among the thorniest issues for the chambers to reconcile. Another key challenge: making the math work. The Concurrent Budget Resolution passed in April provided different instructions to the House and the Senate. While the House was able to work out the math under their bill, the Senate must now do the same on their side.

May

Weekly Update: May 30, 2025

Senators will return to Washington, DC on Monday to begin work on the 1000+ page tax bill recently passed by the House. Speaker Mike Johnson (R-LA) was able to hold the majority of the Republican caucus together and narrowly pass the package out of the House, but its fate in the Senate faces significant headwinds. Many Republican Senators disagree with the House’s bill on a number of issues, including Medicaid cuts, phase outs of select energy tax credits, and the cap on state and local tax (SALT) deductions. Senate Majority Leader John Thune (R-SD) has promised Senate passage by July 4, but even if that date is reached, a conference committee may be needed to further iron out differences across the chambers.

Weekly Update: May 16, 2025

The House Ways and Means Committee released its highly anticipated text for extending the TCJA and various other tax proposals. While the text did not include any proposals that would broadly curtail the tax-exempt bond market, the process of tax reform still has a long way to go.

What’s Next

The House Budget Committee has scheduled a hearing for 9:00am ET on Friday, May 16, where members will stitch together the various committee contributions into a comprehensive bill. As of Friday morning, it remains unclear if House Republicans have enough votes to pass the measure out of the Budget Committee.

After the Budget Committee completes its work, the House Rules Committee will convene to iron out the final procedural considerations prior to a full floor vote on the measure. An amendment to address outstanding policy debates, such as potential changes to the $10k state and local tax (SALT) deduction cap, may be introduced during the Rules Committee meeting. A full floor vote would then follow.

Assuming it passes a full floor vote, the measure would then head to the Senate, where a number Republicans have already indicated their disapproval of various aspects of the House bill. The concurrent budget resolution, passed by both chambers in April, instructs Senate Republicans to make significantly smaller federal spending reductions than the House. Senate Republicans also plan to rely on an accounting method known as “Current Policy Baseline,” which would effectively allow them to zero out the projected cost of extending the Tax Cuts and Jobs Act (TCA) provisions otherwise set to expire at the end of the calendar year.

Weekly Update: May 9, 2025

Key tax writers on the House Ways and Means Committee spent a large part of the week working to iron out outstanding policy disputes in anticipation of unveiling their contribution to the broader forthcoming reconciliation package. While major questions remain, Committee leadership could begin releasing legislative text in the coming days. 

Initial text could come as soon as this afternoon (May 9), but may omit specific revenue raisers that would be included at a later time. Leadership aims to begin the Committee’s markup next Tuesday, May 13, but that date is subject to change pending the outcome of negotiations through the weekend. 

Speaker Johnson (R-LA) continues to express confidence in his chamber’s ability to pass a full bill prior to its upcoming recess for Memorial Day. The Ways and Means Committee hitting its targets for a markup next week is essential to the House hitting its broader timelines. Amid several policy impasses, the Speaker also indicated that the House may not hit its target of $2 trillion in cuts, indicating that $1.5 trillion may be a more realistic goal. Per the Budget Resolution’s instructions, if the House reduces its spending reduction goal by $500 billion it must also reduce its planned expenditures by the same amount. 

While details on potential threats to the municipal bond market remain scarce, advocates are generally hearing positive reactions from the Hill. It is critical to note, however, that nearly all proposals, including changes to the tax-exempt status of qualified bonds, remain on the table as potential “pay fors” pending the outcome of broader policy debates such as those listed below.

Focus on SALT

How to address the cap on state and local tax (SALT) deductions remains one of the biggest sticking points for the caucus. Republicans from high tax states such as California, New York, and New Jersey have long demanded a substantial increase to the cap. Many view the decision to instate a $10k cap on the deduction as having cost several high tax state Republicans their seats, and possibly the Republican party its majority in the House, after the 2018 elections. Any final tax package is almost certain to contain some degree of relief on the cap, but as of Friday morning, negotiators have yet to find a compromise that will satisfy the “SALT caucus” of Republicans without significantly ballooning the cost of the package. Republican leadership initially offered to raise the cap to $20k and then $30k, but SALT Republicans have rejected both offers as insufficient and “insulting.” The $10k cap is a temporary provision enacted under TCJA that sunsets without action at the end of the calendar year. 

Medicaid 

Republican members of the House Energy and Commerce Committee also deliberated on how to accomplish their Committee’s budget instructions to reduce federal spending by nearly $800 billion. Hitting that threshold would almost have to include some degree of cuts to federal spending on Medicaid funding to state governments, which is distributed via Federal Medical Assistance Percentage (FMAP) formulas. Negotiators have proposed several options, including a per capita cap on state FMAP allocations. Such a move would overload a greater share of the cost of Medicaid to state governments and may result in states having to cut back on benefits to residents. Reporting from the Hill suggested the proposal was both “on” and definitively “off the table” throughout the week. At this point it remains unclear to what extent Congress will alter Medicaid funding in its upcoming package. 

White House Proposals

The Administration has also reportedly sent its wish list of tax proposals to the Hill in both writing and via several phone calls between President Trump and congressional leaders. The White House is looking to add a number of campaign promises—including no taxes on tips and overtime—into the mix that are in addition to the extensions of TCJA provisions. The President has also thrown tentative support behind some proposals that would raise revenue such as closing the carried interest loophole and adjusting the tax marginal tax rate. 


It is critical for municipal market participants to start and maintain a dialogue with members of Congress on the importance of tax-exempt bonds to their district and constituents.

Debt Ceiling

The reconciliation package remains tied to the federal government’s need to address its debt ceiling. Treasury Secretary Scott Bessent has indicated he would provide updated estimates in early May for the federal government’s “x-date,” the day on which the federal government will exhaust its extraordinary measures for handling the debt ceiling. While he did not provide estimated dates, Bessent did indicate that the federal government’s debt ceiling was on a “warning tack.” Outside groups estimate the federal government will reach its “x-date” sometime between August 1 and October 31, 2025.

Weekly Update: May 2, 2025

Various House Committees have begun marking up, and in some cases advancing, their contributions to a larger reconciliation bill. Municipal market participants await insights from the House Ways and Means Committee, which has been instructed to make trillions of dollars of cuts and would have jurisdiction over any potential changes to tax-exempt municipal bonds.

Key updates from April 30, 2025 markups held by other committees follow below. While the Ways and Means Committee is rumored to hold its markup next week, but that timing is highly subject to change. Congressional tax writers are hoping other committees will complete their work prior to finalizing the tax section of the package.

A number of key policy issues remain unresolved, including:

  • How to address the demands of “SALT Republicans,” a cohort of moderate Republican hailing from states with high state and local tax (SALT) deduction claims? The cohort seeks a meaningful increase to the $10k cap on the SALT deduction instated by the TCJA of 2017.
  • What changes could be made to Medicaid? The Energy and Commerce Committee has been instructed to pursue policy changes that would lower the deficit by $800 billion of the next 10 years, an amount that would likely require some change to cost sharing relationship between the federal and state governments.
  • To what extent will new tax breaks proposed by President Trump, including no longer taxing earned tips and overtime pay, be worked into the broader package?

At this point in time, the tax exemption on municipal bonds shares broad bipartisan support, but decisions on large outstanding policy questions (likely over the weekend and into early next week) will influence the Ways and Means Committee’s need for additional revenue offsets. It is likely the Committee will begin releasing legislative text for proposed tax law changes between now and the next two weeks, although that expectation is subject to change pending the outcomes of ongoing negotiations.

Even beyond these policy disputes within the House, the two chambers of Congress continue to work under differing sets of instructions for their respective committees. The House is pursuing work to substantially reduce certain federal outlays, while the Senate aims to pursue a “current policy baseline” strategy that would effectively allow them to assume a zero dollar cost for extending TCJA provisions.

It is critical for municipal market participants to start and maintain a dialogue with members of Congress on the importance of tax-exempt bonds to their district and constituents.

What’s Next?

Speaker Mike Johnson (R-LA) and other members of House Republican leadership continue to indicate that they want to pass their chamber’s version of a reconciliation package by the Memorial Day holiday. This deadline is ambitious but certainly possible. Other Republican members of Congress have indicated that timing on the chamber’s work may slip into June. Once the House passes its version of the bill, the Senate will need to work on its version of the bill. The chambers would need to iron out differences via either a conference committee after the Senate passes its own version, or by “pre-conferencing” outstanding differences before the Senate votes on a bill.

The White House has indicated it now views July 4 as a deadline for final enactment of the package, although many view this timeline as overly ambitious. Treasury Secretary Bessent will release updated estimates on the timing of the “x-date,” the day on which the federal government will exhaust its extraordinary measures for handling the debt ceiling. Outside groups estimate the federal government will reach its “x-date” sometime between August 1 and October 31, 2025. Assuming Republican leadership continue to plan to use a reconciliation package to address the debt ceiling, the “x-date” would be a near-essential deadline to conclude work.

April

Weekly Update: April 25, 2025

Members of the House and Senate will return to Washington, DC next week after a two-week recess. The House will likely immediately dive into its work of crafting a reconciliation package now that both chambers have reached a concurrent budget resolution. Some House committees may begin markup of various aspects of the package as early as next week. We expect the House Ways and Means Committee, which has jurisdiction over tax law changes, may possibly begin its work the following week. It is possible, although not certain, that specific legislative text proposals could trickle out of Congress as early as next week.

Both Chambers Agree to Concurrent Budget Resolution

In a major advancement for Republicans’ economic agenda, the House passed the Senate’s revised budget resolution on Thursday, April 10, 2025. The move came after fiscal conservative holdouts forced Speaker Mike Johnson (R-LA) to scrap an earlier vote planned for that Wednesday. While the concurrent resolution’s instructions differ for tax writing committees across the House and the Senate, it does allow both chambers to begin the arduous work of crafting forthcoming reconciliation packages—albeit along two paths and under differing targets.

March

Weekly Update: March 28, 2025

Congressional leaders in both chambers have largely coalesced around idea of tackling all of the President’s financial agenda in “one, big beautiful” bill. The House and Senate have passed competing budget resolutions, and differences between the two must be ironed out in a concurrent resolution to begin the process of crafting a forthcoming reconciliation bill. Senate leadership is hopeful, however, that they can pass a budget resolution that aims to tackle the same breadth of agenda items as those listed in the House resolution—including expirations of select TCJA provisions and addressing the federal government’s debt limit. Senate Budget leadership aims to craft and pass a budget resolution that concurs with the broad goals of the House’s resolution, but provides differing instructions to Senate Committees than those provided to House Committee’s. Such a move would allow both chambers to proceed with reconciliation work, while punting more specific policy disagreements to be ironed out at a later stage.

At this point in time, the Senate aims to pass a new budget resolution prior to adjourning for its Easter recess on April 11. Meanwhile, the House Ways and Means Committee continues to meet and discuss initial policy plans for a forthcoming reconciliation package.

Revised estimated timelines for the federal government’s x-date now suggest that Congress has until late summer or early fall to address the debt ceiling. These estimates will be further updated once the federal government passes the April 15 deadline for income tax filings. Later estimated dates suggest Congress has more time to include further financial policy goals, such as extending TCJA provisions, in a legislative vehicle to address the debt ceiling.

February

Weekly Update: February 28, 2025

Late in the evening on 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. Tuesday’s vote represents a significant advance in the Republican effort to address the expirations of the TCJA in the first half of this year, but a number of challenges remain. While this plan is ambitious, municipal market participants should prepare for developments to occur along this timeline. Read Full Update on House Resolution >

WeeklY Update: February 21, 2025

While the House remained in recess this week, Republican leadership and negotiators were busy calling members to whip votes in favor of the House budget resolution in advance of potential floor action when members of Congress return to Washington, D.C. next week. The House package aims to advance much of the President’s economic agenda, including addressing expiration of certain TCJA provisions, via one bill. It faces potential headwinds, however, from moderate Republicans who fear the measure may pave the path for too drastic of cuts to federal spending. Despite apparent dismay from the President earlier this week, the Senate held a floor vote on Thursday to advance its more limited measure that would save work on TCJA for a second bill later in the year. Both chambers must agree upon the same budget resolution to set high level spending parameters prior to beginning work on specific policy measures in a forthcoming reconciliation package.

Weekly Update: February 14, 2025

The House and Senate have released and advanced competing budget resolutions out of Committees. While both versions would officially kick start the budget reconciliation process, the two chambers have varying approaches on how to enact President Trump’s economic agenda. The House is pursuing “one, big, beautiful bill” that would attempt to tackle everything, including expiring provisions of the TCJA, in one sweep. Meanwhile, the Senate is advancing a narrower approach that aims to tackle energy, defense, and the border today, while saving TCJA for a later bill. Both packages propose cuts to federal spending, but the House’s proposal seeks to reduced federal costs by $1.5 to $2 trillion, which would put significant pressure on negotiators to find offsets.

January

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