New Infrastructure Bonds: Lower Borrowing Costs for State and Local Governments.
This law introduces "American Infrastructure Bonds" to help state and local governments finance public projects like roads and schools. The federal government will provide a direct payment (a credit) equal to 28% of the interest paid on these bonds, significantly lowering borrowing costs for local authorities. While investors must pay federal income tax on the interest from these specific bonds, the overall goal is to accelerate crucial infrastructure investments by making financing cheaper.
Key points
The federal government will subsidize 28% of the interest costs for state and local governments issuing these bonds for infrastructure projects.
Interest earned by investors on these new bonds will be subject to federal income tax, unlike traditional municipal bonds.
The mechanism aims to reduce borrowing expenses for local governments, facilitating faster construction and modernization of public infrastructure.
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