H.R. 8864: Local Infrastructure Financing Tools Act

This bill, known as the Local Infrastructure Financing Tools Act (or LIFT Act), aims to amend the Internal Revenue Code to introduce a tax credit for certain infrastructure bonds issued within the United States. Here is a breakdown of its main components:

1. Introduction of Tax Credit

The bill establishes a tax credit for issuers of "American infrastructure bonds." This credit will be provided for each interest payment made on these bonds. The Secretary of the Treasury will be responsible for paying this credit to the issuer at the same time the interest payments are due.

2. Credit Payment Details

The amount provided as a credit will vary depending on the year the bond is issued. The applicable percentage for the tax credit will generally be:

• 42% for bonds issued from 2026 to 2030
• 38% for bonds issued in 2031
• 34% for bonds issued in 2032
• 30% for bonds issued in 2033 and thereafter

3. Definition of American Infrastructure Bond

An "American infrastructure bond" is defined as a bond that meets specific criteria, including:

• 100% of the proceeds are to be used for capital or operational expenditures for infrastructure projects.
• The interest on the bond would otherwise be tax-exempt under current tax laws.
• The issuer must elect to have this credit apply before the bond is issued.

4. Treatment of Interest Income

The interest on these bonds will still be subject to income tax, despite the credit offered to issuers.

5. Regulations and Administration

The Secretary of the Treasury may create rules and regulations to ensure the effective implementation of this bill.

6. Conforming Amendments

Changes will also be made to adjust sections of the tax code to accommodate this new credit, including updating related legal references to ensure consistency in tax law.

7. Effective Date

The provisions of this act will apply to bonds issued more than 30 days after enactment.

8. Permanent Modifications

The bill also proposes permanent modifications to certain tax exemptions related to small issuer rules for financial institutions, increasing the limit from $10 million to $30 million.

Relevant Companies

• FLR (Fluor Corporation) - A company involved in engineering and construction, likely to be engaged in infrastructure projects that could benefit from the financing options provided by the American infrastructure bonds.
• GRMN (Garmin Ltd.) - Might leverage infrastructure bonds for projects related to technology improvements in infrastructure or public safety systems.
• AME (American Electric Power Company, Inc.) - A utility company that may seek financing for infrastructure upgrades using American infrastructure bonds.