Use of carryforward bond authority

(a) In general Paragraph (3) of section 146(f) is amended— (1) by striking subparagraph (A) and inserting the following: (A) In general If any issuing authority— (i) elects a carryforward under paragraph (1) with respect to any carryforward purpose, (ii) receives a carryforward under paragraph (4)(B)(i) with respect to any carryforward purpose, or (iii) redesignates a carryforward under paragraph (4)(B)(ii) for any carryforward purpose, any private activity bonds issued by such authority with respect to such purpose at any time during the 3 calendar years following the calendar year in which the carryforward arose shall not be taken into account under subsection (a) to the extent the amount of such bonds issued at or prior to such time does not exceed the amount of the carryforward elected, received, or redesignated for such purpose, as reduced by any amount subsequently transferred to another issuing authority or redesignated for another purpose pursuant to paragraph (4)(B)., and (2) in subparagraph (B), by inserting, or received or redesignated for, after with respect to. (b) Election Paragraph (4) of section 146(f) is amended to read as follows: (4) Election (A) In general Except as provided in subparagraph (B), any election under this subsection (and any identification or specification contained therein), once made, shall be irrevocable. (B) Exception for housing (i) Transfer In the case of any carryforward elected under paragraph (1) by an issuing authority with respect to any carryforward purpose, during the period described in paragraph (3)(A) with respect to such carryforward, such issuing authority may transfer such carryforward to any issuing authority within the same State that is authorized to issue qualified mortgage bonds or exempt facility bonds described in section 142(a)(7). (ii) Redesignation In the case of any carryforward— (I) elected under paragraph (1) by an issuing authority with respect to any carryforward purpose which has not been transferred pursuant to clause (i), or (II) received by an issuing authority pursuant to clause (i) with respect to any carryforward purpose, during the period described in paragraph (3)(A) with respect to such carryforward, such issuing authority may redesignate such carryforward to be for the purpose of issuing qualified mortgage bonds or mortgage credit certificates, or for the purpose of issuing exempt facility bonds described in section 142(a)(7). (iii) State direction In the case of a State which has enacted a law described in subsection (e)(1), such State may, by law, prohibit, limit, require, or otherwise direct transfer or redesignation by issuing authorities within such State (except in the case of a constitutional home rule city) pursuant to this subparagraph.. (c) Effective date The amendments made by this section shall apply to elections made under section 146(f) of the Internal Revenue Code of 1986 after December 31, 2025.