Section 1 Short title
This Act may be cited as the “Local Infrastructure Tax Cuts Act”.
Local Infrastructure Tax Cuts Act
A BILL
To amend the Internal Revenue Code of 1986 to modify the limitation on individual deductions for certain state and local taxes and to allow a deduction for qualified special assessment taxes, and for other purposes.
Sec. 2 Modification of limitation on individual deductions for certain state and local taxes
In general— Section 164(b)(7) of the Internal Revenue Code of 1986 is amended to read as follows:
“(7) Applicable limitation amount
“(A) In general—For purposes of this subsection, the term applicable limitation amount means—
“(i) $0 in the case of any taxpayer whose modified adjusted gross income exceeds the threshold amount,
“(ii) $5,000 in the case of a married individual filing a separate return, and
“(iii) $10,000 in the case of any taxpayer not described in clause (i) or (ii).
“(B) Threshold amount—For purposes of this paragraph, the threshold amount shall be—
“(i) in the case of a joint return, $215,000,
“(ii) in the case of a head of household (as defined in section 2(b)), $161,250, and
“(iii) in the case of any taxpayer not described in clause (i) or (ii), $107,500.
“(C) Modified adjusted gross income—For purposes of this paragraph, the term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
“(D) Inflation adjustment—In the case of any taxable year beginning after 2027, each of the dollar amounts in subparagraphs (A) and (B) shall be increased by an amount equal to—
“(i) such dollar amount, multiplied by
“(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2026” for “calendar year 2016” in subparagraph (A)(ii) thereof.”
Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2026.
Sec. 3 Deduction allowed for qualified special assessment taxes
In general— Section 164(a) of the Internal Revenue Code of 1986 is amended by inserting after paragraph (4) the following new paragraph:
“(5) Qualified special assessment taxes.”
Qualified special assessment taxes— Section 164(b) of such Code is amended—
by redesignating paragraphs (6) and (7) as paragraphs (7) and (8), respectively, and
by inserting after paragraph (5) the following new paragraph:
“(6) Qualified special assessment taxes
“(A) In general—The term qualified special assessment tax means a tax which is imposed—
“(i) by a State, a possession of the United States, or a political subdivision of any of the foregoing, or by the District of Columbia,
“(ii) on real property located within a geographic area designated as a special assessment district by such State, possession, or political subdivision, or by the District of Columbia, and
“(iii) for the purpose of funding a community infrastructure project that would directly benefit such real property.
“(B) Community infrastructure
“(i) In general—For purposes of subparagraph (A), the term community infrastructure means a project or facility described in clause (ii) that is owned by—
“(I) a State, a possession of the United States, or a political subdivision of any of the foregoing,
“(II) the District of Columbia, or
“(III) a not-for-profit, member-owned utility service.
“(ii) Project described—A project or facility described in this clause is any of the following:
“(I) Any transportation project.
“(II) A school, hospital, police, fire, emergency response, or other community support facility.
“(III) A water, waste-water, stormwater, telecommunications, electric, gas, or other utility infrastructure project.
“(IV) A dam restoration project.
“(C) Deduction limited to taxes paid or accrued with respect to principal residences—The deduction under subsection (a) for qualified special assessment taxes may only be allowed if such taxes are paid or accrued with respect to the taxpayer’s principal residence (within the meaning of section 121).”
Application of limitation on amount of deduction— Section 164(b)(7)(B) of such Code, as redesignated by subsection (b), is amended by striking “and (3)” and inserting “(3), and (5)”.
Conforming amendment— Section 164(c)(1) of such Code is amended by striking “Taxes” and inserting “Except as provided in subsection (a)(5), taxes”.
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2026.