by Elizabeth Kellar, director of public policy, ICMA 

Congress passed the Tax Cuts and Jobs Act at the end of December, estimated to cost $1.5 trillion. These provisions are especially important to local governments:

Retains Private Activity Bonds (PABs). This popular economic development tool was retained, along with the tax-exempt status of municipal bonds.

Caps State and Local Tax Deduction (SALT). Homeowners can deduct up to $10,000 in state and local taxes (any combination of property and state income or sales taxes). This cap is expected to increase taxes on many middle-class households in cities and suburbs where the cost of living is relatively high.

Eliminates Tax-Exempt Status of Advance Refunding Bonds. This provision is effective December 31, 2017. So far, there is no transition relief.

Retains Unrelated Business Income Tax (UBIT) Rules. Public pension plan investments, for example, are not subject to UBIT and will retain that status.

Retains Historic Tax Credit with Reduced Value. The Historic Tax Credit is retained but is paid out over five years. This reduces the value of the credit by 15 to 20 percent. The law also repeals the 10 percent rehabilitation credit for nonhistoric buildings.

Eliminates the Business Deduction for Parking and Transit Benefits.