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Private space companies, including Elon Musk’s SpaceX and Jeff Bezos’s Blue Origin, stand to benefit from a preferential tax treatment tucked into Donald Trump’s signature spending plan.
The bill, which Trump signed last week, includes a provision that will allow spaceports to be financed in the municipal debt market through so-called private activity bonds, which fund non-governmental projects that have some public benefit.
The financing tool, which offers tax-free interest and thus lower financing costs compared with traditional corporate bonds, is a boon to the burgeoning US commercial aerospace industry, led by Blue Origin and SpaceX.
The two billionaire-led companies are leading a modern-day space race as two of the richest men in the world seek to grow humanity’s sphere of influence beyond Earth’s atmosphere while the Trump administration considers stark cuts to Nasa. Representatives of Blue Origin and SpaceX did not respond to requests for comment.
The addition of the spaceport clause and other pro-muni bond tweaks in the sweeping tax bill “speaks to the advocacy and lobbying taking place in Washington”, said Jason Appleson, head of municipal bonds at PGIM Fixed Income.
Airports and seaports are among the sorts of projects that already have access to tax-exempt financing via private activity bonds, which saves issuers billions of dollars each year. The non-partisan Congressional Budget Office estimates the cost of the tax exemption of private activity bonds at more than $43bn over the next decade, though there was no estimate of how much spaceports contribute to the figure.
The spaceport exemption added to Trump’s “big, beautiful bill” also covers spacecraft manufacturing facilities and mission control operations, making it “a little more expansive than the definition of an airport”, said Leslie Powell, a partner with law firm Kutak Rock focused on public finance.
The muni bond language for spaceports was backed this year by lawmakers from Florida, California and New Mexico, which are among the states pushing to develop space infrastructure.
It was not in the Senate finance committee’s initial draft or the first version approved by the House of Representatives, only appearing as part of the sweeping tax bill when the Senate reconsidered the measure in late June.
“This measure is crucial for the continued growth of Florida’s Space Coast, which is leading the charge in the space race,” Ashley Moody, a Republican senator from Florida who took credit for the provision’s passage, said in a statement. Similar language was previously sponsored in 2024 by Marco Rubio, Moody’s predecessor as Florida senator and now the US secretary of state.
Not everyone in Congress is on board with the tax break for Big Space.
Ron Wyden, a Democratic senator from Oregon, characterised the “special new tax break for SPACEPORTS” as “Trump’s wedding gift to Bezos and birthday gift to Musk” in a post on social media network Bluesky, referencing the Amazon founder’s controversial Venice nuptials and the Tesla chief’s 54th trip around the sun.
Salud Carbajal, a Democratic congressman whose southern California district includes Vandenberg Space Force Base, supported the standalone spaceport bill but said inclusion of the language was not enough to get him to vote for Trump’s tax bill. “The acute harm the Republicans’ bill inflicts on working families far outweighs any potential benefits from this single provision,” he said in a statement.
The passage of the language amounts to a pleasant surprise for the municipal bond industry, which was bracing for private activity bonds to be reined in by lawmakers seeking to pay for the cost of the tax cuts in Trump’s bill.
The CBO has estimated that the bill will increase the national debt by more than $3.3tn to 2034, and muni bond sales hit a record pace earlier this year on fears that Congress would curb municipal bond provisions rather than expand them.
