A bill to amend the Internal Revenue Code of 1986 to restore treatment of State and local bonds which are guaranteed by a Federal home loan bank as not federally guaranteed for purposes of determining their tax-exempt status.

Senate Bill

S. 3941

119th Congress

A bill to amend the Internal Revenue Code of 1986 to restore treatment of State and local bonds which are guaranteed by a Federal home loan bank as not federally guaranteed for purposes of determining their tax-exempt status.

In Committee

Introduced:Feb 26, 2026

Primary Sponsor

Catherine Cortez Masto

D - NV

Cosponsors

0

Quick Stats

Summary

This bill would restore the tax-exempt status of state and local government bonds that receive backing from Federal Home Loan Banks. Currently, when these bonds get federal guarantees, they lose their tax-free status, making them less attractive to investors and more expensive for local governments to issue, which can increase costs for community projects like affordable housing, schools, and infrastructure.

Latest Action

Read twice and referred to the Committee on Finance.

Introduced2/26/2026

StatusRead twice and referred to the Committee on Finance.

ChamberSenate

Data from Congress.gov

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Vote Prediction

A bill to amend the Internal Revenue Code of 1986 to restore treatment of State and local bonds which are guaranteed by a Federal home loan bank as not federally guaranteed for purposes of determining their tax-exempt status.

This bill would restore the tax-exempt status of state and local government bonds that receive backing from Federal Home Loan Banks. Currently, when these bonds get federal guarantees, they lose their tax-free status, making them less attractive to investors a

Community Breakdown

Pass

0%

Fail

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0 predictions

This bill would restore the tax-exempt status of state and local government bonds that receive backing from Federal Home Loan Banks. Currently, when these bonds get federal guarantees, they lose their tax-free status, making them less attractive to investors and more expensive for local governments to issue, which can increase costs for community projects like affordable housing, schools, and infrastructure.

Bill Number: 3941
Introduced: 2/26/2026
Status: Read twice and referred to the Committee on Finance.

Data from Congress.gov

AI-generated summary

Fact Sheet

Title: A bill to amend the Internal Revenue Code of 1986 to restore treatment of State and local bonds which are guaranteed by a Federal home loan bank as not federally guaranteed for purposes of determining their tax-exempt status.
Bill Number: 3941
Sponsor: No sponsor
Status: Read twice and referred to the Committee on Finance.
Introduced: 2/26/2026
Summary: This bill would restore the tax-exempt status of state and local government bonds that receive backing from Federal Home Loan Banks. Currently, when these bonds get federal guarantees, they lose their tax-free status, making them less attractive to investors and more expensive for local governments

Data from Congress.gov

AI Summary

Plain-English explanation of this bill

This bill would restore the tax-exempt status of state and local government bonds that receive backing from Federal Home Loan Banks. Currently, when these bonds get federal guarantees, they lose their tax-free status, making them less attractive to investors and more expensive for local governments to issue, which can increase costs for community projects like affordable housing, schools, and infrastructure.

Last updated: 2/28/2026

Key Points

Main provisions of the bill

Allows state and local government bonds backed by Federal Home Loan Banks to remain tax-exempt, reversing current tax rules
Could lower borrowing costs for cities, counties, and states by making their bonds more attractive to investors who value tax-free income
Primarily affects financing for community development projects, including affordable housing initiatives that often use Federal Home Loan Bank support
Would help local governments access more affordable financing options without losing tax benefits when they seek federal backing for their bonds

How This Impacts Americans

Potential effects on citizens and communities

Local governments and municipal bond investors would be the primary beneficiaries. Cities and states could save money on interest payments when financing public projects, potentially freeing up funds for other community needs. Investors in municipal bonds would gain access to more tax-exempt investment options, while communities could see more affordable housing and infrastructure projects move forward with lower financing costs.

Policy Areas

No policy areas assigned yet.

Scope & Jurisdiction

Jurisdiction Level

federal

Congressional Session

119th Congress

Citation Reference

3941, 119th Congress (2026). "A bill to amend the Internal Revenue Code of 1986 to restore treatment of State and local bonds which are guaranteed by a Federal home loan bank as not federally guaranteed for purposes of determining their tax-exempt status.". Source: Voter's Right Platform. https://votersright.org/bills/119-s-3941

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