H.R. 1 was signed into law by President Trump on July 4, 2025. Because the bill was passed through Congress using the reconciliation process, a special procedure used primarily for tax and revenue legislation, H.R. 1 contains little in the way of explicit infrastructure funding for traditional projects like roads, bridges, and transit. These funding streams are expected to be taken up in future legislation to reauthorize the Surface Transportation Act. However, there are some infrastructure funding changes as well as several provisions in the bill that city leaders should be aware of due to their indirect impact on infrastructure funding and projects.

1. Rescission of funding for certain clean energy and community-focused grants

H.R. 1 rescinds $2.4 billion in unobligated funds from the Neighborhood Access and Equity (NAE) grant program, which was intended to improve walkability, safety, and affordable transportation access. When Congress rescinds funds, it means taking back money that had previously been allocated, so even if a city has a grant agreement they can still be at risk of losing the funding if that wasn’t obligated before July 4, 2025. 

Unobligated funds means funds that haven’t been committed to a certain purpose through a binding agreement like a grant or contract. So if you had a plan for spending certain funds, but had not yet signed a contract, they can be rescinded. Similarly, if an NAE award was announced but the grantee was still awaiting funds as is the case for many of these grants, they will no longer be awarded by DOT. This resource has additional detail and can help you determine if you have a project at risk. 

Unobligated funds from several competitive grant programs designed to help cities transition to clean energy will also be rescinded: Climate Pollution Reduction Grants, including both planning and implementation grants;  Clean Heavy-duty Vehicles; Clean Ports; and environmental justice-related grants like Community Change Grants. Estimates of the extent and dollar amounts of these rescissions can be found here.  

2. Faster phase-out tax credits for clean vehicles clean energy

While H.R. 1 maintains some of the clean energy and clean vehicle tax credits created through the Inflation Reduction Act, it accelerates their phase out and adds new requirements that may make it more difficult for cities to take advantage of them. However, the Direct Pay mechanism (also known as elective pay) created to allow local governments to take advantage of these tax credits remains in place. 

The accelerated phase out timeline is as follows:

This resource provides a helpful explainer on the impact of H.R. 1 on direct pay and tax credits.

3. Expansion of tax credits to support housing and job creation

While affordable housing isn’t traditionally considered infrastructure, it is often a component of larger projects that include infrastructure and can impact infrastructure needs. For example, large neighborhood redevelopment projects can increase the need for transit. H.R. 1 expanded the Low Income Housing Tax Credit (LIHTC), a tax credit that provides incentives for developers to build and maintain low-income housing by both permanently reducing the level of financing developers need to obtain in order to be eligible for the credit and increasing the value of the credit. Industry experts believe that this will lead to the construction of a significant number of new affordable housing units across the country. 

The smaller New Markets Tax Credit (NMTC) program was also made permanent under H. R. 1. This tax credit is also designed to spur investment in underserved areas, but is focused on job creation rather than housing and can be used to provide financing for equipment, operations, or real estate for small businesses and community organizations. 

The expansion of both tax credits presents an opportunity for public-private partnerships and other forms of collaboration between cities, developers, and employers to ensure projects meet community needs and that the surrounding infrastructure supports them.

4. Revamped Opportunity Zone Program

The Opportunity Zone program is a tax incentive designed to spur investment and economic development in low-income census tracts. Opportunity Zone investments can be for a variety of projects, but the most common investments are in commercial and industrial real estate; residential real estate and housing, especially multi-family housing; infrastructure; and business.

H.R. 1 makes the Opportunity Zone program permanent, placing additional conditions on what is required for a location to qualify for investment and weighting the incentives toward investment in rural areas. H.R. 1 also closed a loophole that allowed some high-income census tracts to qualify as opportunity zones. More details about the new Opportunity Zone program can be found here.