Investing in our communities and critical infrastructure
As the leading voice for excellence in public finance, NAST advocates for legislation that ensures responsible, empowered growth at low costs to taxpayers. Responsible public finance makes critical projects such as transportation (such as roads, bridges and airports), utilities, and education possible and feasible.
By leveraging financial tools, advocated by NAST, state and local governments have saved billions of dollars by allowing them to provide more comprehensive savings at lower costs to their taxpayers.
State Debt Management Network (SDMN)
A Network of the National Association of State Treasurers
Key Legislation
Municipal Bond Tax Exemption
The federal tax-exemption for municipal bonds is one of the most effective and time-tested tools available to state and local governments to finance critical infrastructure and public service projects. For over a century, this exemption has allowed issuers to access capital at lower costs, enabling the development of schools, hospitals, roads, water systems, and other essential infrastructure—all while saving taxpayer dollars.
Today, the tax-exemption is under renewed threat as Congress considers major tax legislation in 2025. While the specifics of proposed changes remain uncertain, the potential elimination or reduction of this exemption could have devastating consequences. Without it, public issuers would face significantly higher borrowing costs—an estimated $823.92 billion in additional costs over the next decade—translating to a $6,554.67 financial burden per American household. These costs would likely result in higher taxes, reduced services, and widespread delays or cancellations of urgently needed projects.
More than 75% of public infrastructure across the country is financed by tax-exempt municipal bonds, and in the average congressional district, over 1,400 projects have relied on this tool in the past decade alone. The exemption not only supports community development but also provides a stable investment option for millions of Americans, particularly retirees who rely on predictable, tax-advantaged income.
NAST is working alongside members of Congress, the Public Finance Network, and other stakeholders to preserve this vital component of federal tax policy. The legislative window to act may be short, with House action expected to begin as early as late April and Senate action anticipated in June or July. As deliberations continue, it is essential for policymakers and the public to understand what is at stake.
Additional resources and data are available below to support ongoing education and advocacy.
- Built by Bonds Data Brief
- Sample Email to Members of Congress
- NAST Congressional Letter Supporting the Tax Exemption– March 2025
- Rep. Bacon’s Dear Colleague Letter
- House Financial Services Committee Chair Letter
- PFN Primer on Tax-Exempt Bonds
- University of Chicago’s Muni Finance Dashboard – Bond Issuance by Congressional District
Advance Refunding
Why Advanced Refunding is necessary
Advanced Refunding provisions of S. 1453 and H.R. 1837 would restore ability for states to advance refund their tax-exempt municipal bonds. A refunding occurs when the proceeds from one bond are used to pay off another bond, typically at a lower interest rate. State and locally issued bonds are traditionally used for financing of infrastructure projects.
The use of this tool saves taxpayers’ money and frees up cash flow for additional projects like transportation (such as roads, bridges and airports), utilities, education, and other general purpose bonds. By using this financial tool, state and local governments have saved billions of dollars by allowing them to provide more comprehensive savings at lower costs to their taxpayers.
If these provisions are enacted, this would restore the option to conduct advance refundings of bonds that was eliminated in the Tax Cuts and Jobs Act of 2017. Prior to that law, state and local jurisdictions could issue one advance refunding per tax exempt municipal bond at a lower rate of the original bond. Between 2012 and 2016, bonds totaling approximately $391 billion were issued that were then subject to advance refunding totaling about $12 billion on infrastructure investments; funds that could be used for new projects. By eliminating the ability for state and local governments to issue tax-exempt advance refunded bonds imposed substantial financial costs to them. NAST supports legislation to reinstate this critical financing tool.
NAST Policy Resolution on Preserving, Enhancing, and Restoring the Tax-Exempt Status of Municipal Bonds