U.S. Reps. Gwen Moore, D-Wis., and David Schweikert, R-Ariz., on Wednesday introduced bipartisan legislation to expand tribal governments’ access to tax-exempt bonds, housing credits and other federal tax incentives, aligning their financing authority more closely with state and local governments.
The Tribal Tax Investment and Reform Act of 2026, H.R. 7705, would amend the Internal Revenue Code to treat tribal governments as states for specified tax purposes and remove what sponsors describe as structural barriers to tribal economic development.
Under current federal law, tribal governments face statutory limits that state and local governments do not, including restrictions on issuing certain tax-exempt bonds, constraints on pension and employee benefit plans, and barriers to fully accessing housing and development tax credits. Those differences can increase financing costs and delay infrastructure, housing and enterprise projects in Indian Country.
The bill would repeal the “essential government function” test that limits tribal bond issuance, establish private activity bond volume cap rules for tribal governments, and place tribes on equal footing with state and local governments for select excise taxes. It also would create a $175 million annual New Markets Tax Credit allocation for low-income tribal communities, strengthen the Low-Income Housing Tax Credit in Indian areas, and update the expired Indian Employment Tax Credit by increasing the wage offset from $20,000 to $30,000.
Additional provisions would align tribal pension and employee benefit plans with state government plans, clarify the treatment of tribally funded charities under public support rules, exclude tribal general welfare benefits from Supplemental Security Income eligibility calculations, and make Indian Health Service loan repayment and scholarship payments tax-exempt.
“Tribal governments have faced unfair hurdles when trying to finance economic development projects and meet pressing needs in their communities,” Moore said in a statement, describing the proposal as a parity measure grounded in federal trust and treaty responsibilities.
Schweikert said the legislation would allow tribes to finance infrastructure, housing and private investment under clearer, more predictable tax rules.
The proposal follows a similar bill introduced by Moore and Schweikert in 2024 that was referred to the House Committee on Ways and Means but did not advance. Two provisions from the 2024 version were later enacted into law and have been removed from the current bill, which also adds a private activity bond allocation for Alaska Native tribal governments with special rules, according to a spokesperson for Moore.
The legislation shares core bond and tax credit provisions with a companion Senate bill introduced in 2025 by Sens. Catherine Cortez Masto, D-Nev., and Lisa Murkowski, R-Alaska, that has not yet been incorporated into larger tax legislation.
Some tax policy analysts note that bond-related provisions of the House bill, particularly those modeled on prior Tribal Economic Development bond authority, may face fewer political hurdles than proposals involving competitive tax credit allocations. Unlike housing or development credit set-asides, bond parity measures do not reallocate limited annual credit pools among states and other entities.
The renewed push comes amid recent federal developments affecting tribal finance. In December, the U.S. Department of the Treasury finalized regulations clarifying the tax treatment of tribal general welfare programs and wholly owned tribal business entities, reducing long-standing uncertainty that tribal leaders said had increased compliance and borrowing costs.
The legislation is part of a wider effort to address longstanding disparities in how tribal governments are treated under federal financial and tax law compared with state and local governments, particularly in access to financing tools.
H.R. 7705 is expected to be referred to the House Committee on Ways and Means. The measure’s prospects remain uncertain amid broader tax negotiations in Congress.