LIFT Act Local Infrastructure Financing Tools Act
HB8864, the Local Infrastructure Financing Tools Act or “LIFT Act,” would create a new federal tax credit for issuers of certain “American infrastructure bonds.” Under the bill, the Treasury would pay bond issuers a percentage of each interest payment, with the subsidy rate set at 42% for bonds issued from 2026 through 2030, then stepping down in later years. The bonds must be used for infrastructure-related capital expenditures and certain operations and maintenance costs, must generally be tax-exempt under current law but instead elect into the new credit regime, and must meet other restrictions such as limits on premium and rules governing refundings.
The bill would amend the Internal Revenue Code to add a new Section 6436, changing how certain municipal-style infrastructure bonds are financed by replacing tax-exempt interest treatment with a direct federal credit to issuers. It would also conform related federal provisions, including Treasury payment rules and arbitrage treatment, and would require Davis-Bacon prevailing wage requirements for projects financed with these bonds. In addition, the bill would reopen and revise advance refunding rules for certain bonds and permanently raise the small-issuer exception for financial institutions from $10 million to $30 million, with inflation indexing after 2026.
No committee transcript or vote data were provided, so there is no recorded floor or committee sentiment to summarize from the legislative history. Based on the bill text alone, the measure appears designed to be pro-infrastructure and pro-borrowing, suggesting support from local governments, public finance interests, and infrastructure advocates. The absence of recorded votes or discussion means the political reception cannot be assessed from the supplied materials.
The main policy tensions likely involve the cost to the federal government, the use of a direct subsidy instead of traditional tax-exempt bond treatment, and the scope of eligible projects and refunding authority. The advance refunding provisions may draw scrutiny because they reopen a financing tool that has been restricted under current law, while the permanent increase in the small-issuer bank exception could concern critics who view it as a benefit for financial institutions. Davis-Bacon applicability and the mechanics of the issuer credit may also be points of debate among infrastructure, labor, and tax-policy stakeholders.