On July 4, the president signed into law the “One Big Beautiful Bill Act” (the Act). As enacted, the legislation includes changes from the House’s May version that generally favor municipal market participants. Notably, the Act includes two new sections that will impact:

• Spaceports: The Act allows the tax-exempt bond financing of spaceports.
   
• Permanent New Market Tax Credit (NMTC): The Act permanently extends the NMTC program.

The enacted legislation also includes modifications to certain House bill provisions that are relevant to municipal market participants, notably:

• Permanent LIHTC Enhancements: The Act turns the proposed temporary enhancements to low-income housing tax credit and bond financing programs into permanent measures.
   
• Pull Back from House Basis Boost for Rural and Indian Areas: The Act removes the proposed basis boost for low-income housing projects in rural and Indian areas.
   
• Softened Endowment Tax Rate Hike: The Act lowers the proposed new endowment tax rates and expands the number of colleges and universities that are exempt from the endowment tax.

New Provisions: Tax-Exempt Bonds for Spaceports

As enacted, the tax legislation includes additional provisions authorizing tax-exempt bond financing for spaceports under the same general framework that applies to exempt facility bonds for airports under Section 142 of the Internal Revenue Code, with some adjustments that:

• Allow the use of a ground lease of land the federal government owns to meet the state or local governmental ownership requirement;
   
• Allow spacecraft and space cargo manufacturing and assembling facilities to be financed with bond proceeds, along with other facilities for repairs, flight control operations, and other activities related to space travel, provided that all such facilities are located at or in close proximity to a launch or re-entry site;
   
• Exempt spaceports from the public use requirement; and
   
• Create a special exception to the federally guaranteed bond prohibition for rent payments, user fees, or other charges that U.S. agencies and instrumentalities pay for using a spaceport.

New Provisions: Permanent Extension of New Market Tax Credit

The Senate also added a permanent extension of the NMTC to the Act, subject to the current $5 billion limitation in NMTC that may be allocated each year and to a new five-year limit in the amount of NMTC that may be carried over. Under prior law, the NMTC program was set to expire by Dec. 31, 2025.

Unchanged Provisions: Small Issue Bonds

The Act keeps the technical changes, which are applicable upon enactment, to Section 144 of the Internal Revenue Code to reflect updates made to the capitalization of certain startup costs.

Next Steps

The president signed the tax bill into law on July 4. The new spaceport financing provisions apply to any obligations issued after enactment of the Act; however, guidance from the U.S. Department of the Treasury may prove necessary to facilitate issuance of tax-exempt bonds for spaceport facilities given the way the Act excepts spaceports from certain requirements of section 142 of the Code. The enhancements to the low-income housing programs, the increased endowment tax, and the permanent extension of the NMTC program will take effect on Jan. 1, 2026.

Jason Block also contributed to this article.