A bill to amend the Internal Revenue Code of 1986 to provide a more lenient treatment for small issuers of tax-exempt bonds with respect to the arbitrage rebate rules and the private activity bond rules.

Amends the Internal Revenue Code to: (1) raise from $5,000,000 to $25,000,000 the threshold amount of tax-exempt bonds that a small governmental unit may issue and still remain within the exception from arbitrage rebate requirements; and (2) increase from ten percent to 25 percent the amount of tax-exempt government bond proceeds that may be used by a nongovernmental entity for private purposes without triggering treatment of the bond issue as a taxable private activity bond. Limits the latter provision to governmental issuers whose reasonably anticipated amount of tax-exempt obligations to be issued during the calendar year is $25,000,000 or less. Caps at $25,000,000 the amount of bonds to which the issuer may apply the 25 percent private use test in any year.