Tax Exemption for Municipal Bonds Preserved in Tax Reform Legislation Approved by the U.S. House of RepresentativesNovember 17, 2017 | Legislative briefs
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Tax Exemption for Municipal Bonds Preserved in Tax Reform Legislation Approved by the U.S. House of Representatives
On Thursday, November 16, the U.S. House of Representatives approved an overhaul of the federal tax code.
One of the issues initially considered for inclusion in the tax reform legislation (available here) was the future of the tax exemption for municipal bonds. The reform legislation approved by the U.S. House preserves the municipal bond tax exemption.
The Illinois Municipal League (IML) was an early leader at the national level to work toward maintaining the existing tax exemption for municipal bonds. Municipal bonds are used by state and local governments to finance more than two-thirds of U.S. public infrastructure projects. Local governments save an average of 25% to 30% on interest costs due to the tax exemption.
IML worked with members of Congress as well as the Congressional Municipal Finance Caucus, co-chaired by Illinois Congressman Randy Hultgren (R-14) and Maryland Congressman Dutch Ruppersberger (D-2), to ensure the tax exempt status of municipal bonds was maintained.
IML Executive Director Brad Cole served as the point person for this issue on behalf of the National League of Cities (NLC), representing all of the state municipal leagues and cities across the country in the process of negotiating the municipal bond portion of the overall tax code re-write.
The U.S. Senate Finance Committee approved its own version of a tax plan on November 16. It is scheduled for a Senate floor vote on November 27. If this plan is approved by the full Senate, the House and Senate will convene a conference committee to reconcile differences between the bills.
As always, IML staff will continue to monitor any prospective legislative developments and aggressively advocate on behalf of our membership. Should you have any questions, please contact our Legislative Department at (217) 525-1220 or IMLLegislation@iml.org. Thank you.