"One Big Beautiful Bill Act" Signed into Law: Tax-Exempt Bond Financing for Spaceports and Permanent New Market Tax Credit

Strategic Insights -

The president signed the "One Big Beautiful Bill Act" into law on July 4, bringing significant changes to the municipal market. The Act includes provisions beneficial to municipal market participants, particularly those related to spaceports and the New Market Tax Credit (NMTC) program. Two new sections will impact the market: tax-exempt bond financing of spaceports and the permanent extension of the NMTC program.

The Act modifies certain House bill provisions relevant to municipal market participants, including the permanent low-income housing tax credit and bond financing programs, the removal of the basis boost for low-income housing projects in rural and Indian areas, and the softening of the endowment tax rates hike.

Key Takeaways:

  • Tax-exempt bond financing for spaceports is authorized under the same framework as exempt facility bonds for airports, with adjustments that allow spaceports to meet state or local governmental ownership requirements and exempt them from the public use requirement.
  • The permanent extension of the NMTC program is 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.
  • The Act removes the proposed basis boost for low-income housing projects in rural and Indian areas and lowers the proposed new endowment tax rates while expanding the number of colleges and universities exempt from the endowment tax.
  • The enhancements to the low-income housing programs, the increased endowment tax, and the permanent extension of the NMTC program will take effect on January 1, 2026.
  • Guidance from the U.S. Department of the Treasury may be necessary to facilitate issuance of tax-exempt bonds for spaceport facilities.
  • The changes to the tax-exempt bond financing for spaceports and the permanent NMTC program are expected to benefit municipal bond issuers and investors in the municipal market.

Statistics:

  • $5 billion: The current limitation in NMTC that may be allocated each year.
  • 5 years: The new limit in the amount of NMTC that may be carried over.
  • December 31, 2025: The prior expiration date of the NMTC program.
  • January 1, 2026: The effective date for the enhancements to the low-income housing programs, the increased endowment tax, and the permanent extension of the NMTC program.

Sources:

  • "One Big Beautiful Bill Act" signed into law on July 4.
  • Mondaq Ltd, 2025.
  • Greenberg Traurig, LLP.
  • Senate.
  • U.S. Department of the Treasury.