New Infrastructure Bill Simplifies Financing for Private Lead Pipe Removal Starting 2026

The aptly named Financing Lead Out of Water Act of 2025 is tackling a major hurdle in getting rid of those old, toxic lead water pipes: who pays for the part on private property. For years, one of the biggest bottlenecks in replacing lead service lines—the pipe connecting the water main to your house—has been the cost and the murky legal ground around paying for the homeowner’s side of the line. This bill offers a straightforward fix by changing a key tax rule, making it cheaper and easier for cities to finance these projects.

The Tax Loophole This Bill Closes

To understand why this is a big deal, you need a quick lesson in municipal finance. When local governments issue bonds to pay for infrastructure, those bonds are usually tax-exempt, meaning the interest earned by the investor isn't taxed. This makes the bonds cheaper for the city to issue. However, if the money raised is used to benefit a private business or property owner too much—a concept called “private business use”—the bond can lose its tax-exempt status. That risk has made many cities wary of using tax-exempt bond money to replace the private portion of a lead pipe, even though that private section is often the biggest source of lead contamination.

This bill simply says: Forget that rule. Specifically, it modifies the requirements so that using bond money for a “qualified lead service line replacement use”—meaning replacing the private section of the pipe—will not count as “private business use.” The only condition is that the replacement must help the public water system meet the federal drinking water rules for lead. This change kicks in for bonds issued after December 31, 2025, giving cities time to plan.

What This Means for Homeowners and Cities

For a city struggling with high lead levels, this is a massive win. It unlocks the cheapest form of financing—tax-exempt municipal bonds—to cover the entire cost of replacing a lead service line, right up to the foundation of the house. Before this, a city might have had to charge the homeowner directly for the private portion or use more expensive, taxable financing options, slowing down the pace of replacement.

Think about a family living in a older home where the city has identified a lead service line. Currently, they might get a notice saying the city will replace the public side, but the homeowner is on the hook for the thousands of dollars it costs to dig up their lawn and replace the pipe on their property. This bill provides the financial mechanism for the city to potentially cover that entire cost, accelerating the removal of lead from the water supply and taking the financial burden off individual homeowners. By tying the definition of the work directly to existing Safe Drinking Water Act standards, the bill keeps the focus squarely on public health and reducing lead exposure.

In short, this is a piece of legislation that uses a technical tax change to solve a very real, very expensive public health problem. It removes a major financial barrier, paving the way for faster, more comprehensive lead pipe replacement programs across the country.