The Fair Taxation of Municipal Bonds Amendment Act of 2025 aims to amend the District of Columbia's tax code to maintain the tax exemption for out-of-state municipal bonds acquired before January 1, 2025. This legislation responds to concerns raised by retirees and constituents regarding the recent changes introduced by the Fiscal Year 2025 Budget Support Act of 2024, which would subject interest earned on out-of-state municipal bonds to taxation starting January 1, 2025. The bill seeks to protect the financial planning of residents who purchased these bonds with the understanding that their interest would remain tax-exempt.

The specific legal language added to the District's tax code states that interest on obligations of a state, territory, or political subdivision acquired by the taxpayer before January 1, 2025, shall not be included in the computation of District gross income. This amendment reflects a commitment to safeguarding the financial interests of retirees who rely on the income generated from these investments, ensuring that their existing bonds are not adversely affected by the new tax regulations.