PlainBillCongress, translated.Legislation. Context. Public interest.Referred to the House Committee on Ways and Means.
Congressional Research Service
No official summary is available in the imported record yet.
People & committees
Rep. Kustoff, David [R-TN-8] · R–TN
Legislative record
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Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
Source last updated: Sep 19, 2026. Consult Congress.gov for the current record.
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PlainBill explanation
Based on the full Introduced in House · 2025-02-12 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
The bill would change federal tax rules for advance refunding bonds—bonds issued to refinance older bonds before those older bonds are repaid. It would set conditions involving repeat refinancing, repayment timing, and investment of bond proceeds, with separate treatment for certain private activity bonds. The changes would apply to advance refunding bonds issued after enactment. The supplied text does not reproduce the existing tax rule being amended, so it does not fully establish the resulting tax treatment.
Section 149(d) of the Internal Revenue Code of 1986 is amended— (1) in paragraph (1), by striking to advance refund another bond and inserting as part of an issue described in paragraph (2), (3), or (4)
(3) Other bonds (A) In general An issue is described in this paragraph if any bond (issued as part of such issue), hereinafter in this paragraph referred to as the refunding bond, is issued to advance refund a bond unless—
The amendments made by this section shall apply to advance refunding bonds issued after the date of the enactment of this Act.
Section 1 would name the legislation the Investing in Our Communities Act.
This Act may be cited as the Investing in Our Communities Act.
Section 2 would replace an existing reference to advance refunding another bond with a reference to three specified categories of bond issues. The proposal would also renumber two existing paragraphs without reproducing their contents.
(1) in paragraph (1), by striking to advance refund another bond and inserting as part of an issue described in paragraph (2), (3), or (4); (2) by redesignating paragraphs (2) and (3) as paragraphs (6) and (7), respectively
The proposed private activity bond category would cover an entire issue if any bond in it advance-refunds a private activity bond, other than a qualified 501(c)(3) bond. These are tax-law classifications whose definitions are not supplied.
(2) Certain private activity bonds An issue is described in this paragraph if any bond (issued as part of such issue) is issued to advance refund a private activity bond (other than a qualified 501(c)(3) bond).
To stay outside the proposed “other bonds” category, an advance refunding would have to meet the applicable listed conditions. The repeat-refinancing condition would allow only the first advance refunding of an original bond issued after 1985, or the first or second advance refunding of an original bond issued before 1986.
An issue is described in this paragraph if any bond (issued as part of such issue), hereinafter in this paragraph referred to as the refunding bond, is issued to advance refund a bond unless— (i) the refunding bond is only— (I) the 1st advance refunding of the original bond if the original bond is issued after 1985, or (II) the 1st or 2nd advance refunding of the original bond if the original bond was issued before 1986
Subject to the bill’s savings and 90-day exceptions, the older bond would have to be repaid by a specified earliest redemption date. For bonds issued before 1986, that would be the earliest date repayment is allowed at face value or at a premium of no more than 3 percent. For bonds issued after 1985, it would be the earliest permitted repayment date.
(ii) in the case of refunded bonds issued before 1986, the refunded bond is redeemed not later than the earliest date on which such bond may be redeemed at par or at a premium of 3 percent or less, (iii) in the case of refunded bonds issued after 1985, the refunded bond is redeemed not later than the earliest date on which such bond may be redeemed
Clauses (ii) and (iii) of subparagraph (A) shall apply only if the issuer may realize present value debt service savings (determined without regard to administrative expenses)
the earliest date referred to in such clauses shall not be earlier than the 90th day after the date of issuance of the refunding bond.
Those repayment deadlines would apply only when the issuer could save on debt payments measured in present-value terms, ignoring administrative expenses. The required earliest repayment date could not fall before the 90th day after the new bond was issued. This is a condition for the rule, not a guarantee that refinancing would save money.
(B) Special rules for redemptions (i) Issuer must redeem only if debt service savings Clauses (ii) and (iii) of subparagraph (A) shall apply only if the issuer may realize present value debt service savings (determined without regard to administrative expenses) in connection with the issue of which the refunding bond is a part. (ii) Redemptions not required before 90th day For purposes of clauses (ii) and (iii) of subparagraph (A), the earliest date referred to in such clauses shall not be earlier than the 90th day after the date of issuance of the refunding bond.
Another condition would end the initial temporary period under section 148(c) for the new bond’s proceeds no later than 30 days after issuance. The corresponding period for the older bond’s proceeds would end when the new bond was issued. The supplied text does not explain the investment treatment available during that temporary period.
(iv) the initial temporary period under section 148(c) ends— (I) with respect to the proceeds of the refunding bond not later than 30 days after the date of issue of such bond, and (II) with respect to the proceeds of the refunded bond on the date of issue of the refunding bond
For older bonds to which section 148(e) did not apply, another condition would limit proceeds held in investments classified by the tax code as higher yielding and “nonpurpose.” Beginning when the new bond was issued, the ceiling would use amounts held in a reasonably required reserve or replacement fund or during an allowed temporary period, and an amount equal to the lesser of 5 percent of the older issue’s proceeds or $100,000, to the extent allocated to the older bond. The referenced investment definitions are not supplied.
(v) in the case of refunded bonds to which section 148(e) did not apply, on and after the date of issue of the refunding bond, the amount of proceeds of the refunded bond invested in higher yielding investments (as defined in section 148(b)) which are nonpurpose investments (as defined in section 148(f)(6)(A)) does not exceed— (I) the amount so invested as part of a reasonably required reserve or replacement fund or during an allowable temporary period, and (II) the amount which is equal to the lesser of 5 percent of the proceeds of the issue of which the refunded bond is a part or $100,000 (to the extent such amount is allocable to the refunded bond).
The proposed abusive-transactions category would cover an issue if any bond advance-refunds another bond and a device is used in connection with the issue to obtain a material financial advantage based on arbitrage, apart from savings attributable to lower interest rates.
(4) Abusive transactions prohibited An issue is described in this paragraph if any bond (issued as part of such issue) is issued to advance refund another bond and a device is employed in connection with the issuance of such issue to obtain a material financial advantage (based on arbitrage) apart from savings attributable to lower interest rates.
Bonds issued before the date described in proposed paragraph (5) as “the date of the enactment of this subsection” would count toward the repeat-refinancing limits, with two historical exceptions. A refinancing before 1986 would count as an advance refunding only if the new bond was issued more than 180 days before the older bond was repaid. A bond issued before 1986 would count as advance-refunded no more than once before March 15, 1986.
(5) Special rules for purposes of paragraph (3) For purposes of paragraph (3), bonds issued before the date of the enactment of this subsection shall be taken into account under subparagraph (A)(i) thereof except— (A) a refunding which occurred before 1986 shall be treated as an advance refunding only if the refunding bond was issued more than 180 days before the redemption of the refunded bond, and (B) a bond issued before 1986, shall be treated as advance refunded no more than once before March 15, 1986.
For purposes of section 148(f)(4)(C), the bill would require the end of the initial temporary period to be determined without regard to the proposed advance-refunding rule specifying when that period ends. It would renumber existing clauses to insert this exception. The surrounding statutory provision is not reproduced.
(b) Conforming amendment Section 148(f)(4)(C) of such Code is amended by redesignating clauses (xiv) through (xvi) as clauses (xv) through (xvii) and by inserting after clause (xiii) the following new clause: (xiv) Determination of initial temporary period For purposes of this subparagraph, the end of the initial temporary period shall be determined without regard to section 149(d)(3)(A)(iv).
The amendments would apply only to advance refunding bonds issued after the Act’s enactment date. The provision supplies no calendar start date or expiration date.
(c) Effective date The amendments made by this section shall apply to advance refunding bonds issued after the date of the enactment of this Act.
The supplied September 19, 2026 source snapshot records introduction in the House and referral to the House Committee on Ways and Means on February 12, 2025. This snapshot does not establish any later legislative action or enactment.
Source snapshot updated 2026-09-19T23:33:40Z. 2025-02-12: Referred to the House Committee on Ways and Means. 2025-02-12: Introduced in House
A closer look
Reviewed version: Introduced in House · 2025-02-12. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No unrelated provision or policy change attached to appropriations was identified after reviewing the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials, or establish amendment attachment history.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for particular recipients or places was identified after reviewing the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials. The source set cannot establish formal earmark status.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
Findings to examine
The cited findings identify narrow exceptions and preferential treatment within the main policy. Classification does not establish their justification or fiscal effect.
Issuers refinancing qualified 501(c)(3) bonds would receive an express exception from the proposed private activity bond category. This is a specific carve-out within the main policy, not an express exemption from all of the bill’s other conditions. The supplied text does not define which bonds qualify or fully establish the resulting tax benefit.
(2) Certain private activity bonds An issue is described in this paragraph if any bond (issued as part of such issue) is issued to advance refund a private activity bond (other than a qualified 501(c)(3) bond).
(3) Other bonds (A) In general An issue is described in this paragraph if any bond (issued as part of such issue), hereinafter in this paragraph referred to as the refunding bond, is issued to advance refund a bond unless—
Issuers refinancing original bonds issued before 1986 would receive more permissive repeat-refinancing treatment within the main policy: a first or second advance refunding could satisfy the frequency condition, compared with only a first for newer bonds. Historical counting exceptions could also reduce the number of earlier refinancings counted against these limits.
(i) the refunding bond is only— (I) the 1st advance refunding of the original bond if the original bond is issued after 1985, or (II) the 1st or 2nd advance refunding of the original bond if the original bond was issued before 1986
(A) a refunding which occurred before 1986 shall be treated as an advance refunding only if the refunding bond was issued more than 180 days before the redemption of the refunded bond, and (B) a bond issued before 1986, shall be treated as advance refunded no more than once before March 15, 1986.
Full text preserved for this analysis. Legislative record snapshot: Sep 19, 2026. How PlainBill uses AI