America's Largest Infrastructure Law in a Generation Expires in Six Months With No Replacement in Sight
The $1.2 trillion Infrastructure Investment and Jobs Act expires September 30, 2026, threatening to slash highway, bridge, transit, and broadband funding to pre-2021 levels as Congress struggles to agree on reauthorization.
Overview
The Infrastructure Investment and Jobs Act, the largest federal infrastructure spending law in a generation, expires on September 30, 2026. With approximately six months remaining, no replacement legislation has been introduced in either chamber of Congress, and the political conditions that enabled the original bipartisan deal in 2021 have largely evaporated. Unless lawmakers act, formula funding for highways, bridges, transit, and water systems will revert to significantly lower pre-IIJA baseline levels, threatening thousands of projects that state and local governments have planned around the law’s elevated spending.
What We Know
The IIJA authorized $1.2 trillion in federal spending, including $550 billion in new investment above prior baseline levels. As of January 2026, approximately $568 billion of that total had been allocated across roughly 68,000 projects nationwide, according to an analysis by Funding Landscape. Of that allocated amount, $275 billion had been formally obligated, meaning the federal government has entered binding commitments to fund those projects.
The law’s expiration carries different consequences depending on funding type. Formula programs, which distribute money to states by predetermined formulas for highway maintenance, bridge repair, and public transit, would continue but at dramatically reduced pre-IIJA levels. Discretionary grant programs, which fund competitive awards for specific projects, would either expire outright or require fresh Congressional authorization, as reported by Construction Owners Association of America.
The funding picture has already deteriorated. Congress rescinded over $2.3 billion in previously allocated IIJA funds through fiscal year 2026 spending legislation. The largest target was the National Electric Vehicle Infrastructure program, which lost approximately $879 million across formula grants, competitive grants, and the Joint Office of Energy and Transportation, according to the Funding Landscape analysis.
The House Transportation and Infrastructure Committee has held hearings on reauthorization priorities, including a January 2025 session where AASHTO Executive Director Jim Tymon warned that short-term extensions “can make it difficult for state DOTs and local governments to plan” major projects effectively. Tymon also noted that highway construction costs had increased 70 percent over four years while IIJA provided only a 20 to 25 percent boost to state formula dollars, representing a net loss in purchasing power, as reported by the AASHTO Journal.
The Reauthorization Challenge
Historical precedent offers little reason for optimism about an on-time replacement. According to an analysis by Transportation for America, Congress has operated under short-term extensions of expired transportation laws for roughly one-third of the time since 1991. When SAFETEA-LU expired in 2009, it took 33 months and 10 separate extensions before Congress passed MAP-21 in 2012.
The fiscal math presents an even steeper obstacle. Maintaining IIJA-level spending would require approximately $102 billion annually, while the federal gas tax is projected to bring in roughly $44 billion by 2028, leaving a $58 billion annual deficit, as Transportation for America calculated. The original IIJA bridged this gap through novel mechanisms including advance appropriations and deficit spending, but Congress has already begun unwinding some of those tools. A July 2025 budget reconciliation bill added $3 trillion to the federal deficit while cutting popular programs, leaving little political appetite for additional deficit-financed infrastructure spending.
The bipartisan coalition that passed the original law is also fracturing. The Trump administration’s decisions to rescind or redirect funds from congressionally authorized programs have strained relationships across party lines. Senator Sheldon Whitehouse warned at a confirmation hearing that it would be “hard for the minority to agree to a bipartisan bill if the upshot of that agreement was that only the majority’s parts” would be implemented, according to Transportation for America.
The U.S. Department of Transportation has signaled its own priorities for the next bill, including streamlining federal processes, increasing private sector investment, and accelerating project delivery, according to a Gresham Smith analysis of the reauthorization landscape.
What We Don’t Know
Several critical questions remain unanswered. It is unclear whether Congress will attempt a comprehensive reauthorization or default to short-term extensions that maintain current funding levels temporarily. The financing mechanism for any successor bill is entirely unresolved, with options ranging from a gas tax increase to general fund transfers to new user fees, none of which command consensus.
The fate of projects that have been awarded but not yet formally obligated is also uncertain. These projects occupy a gray zone: they have federal commitments in principle but not the binding financial agreements that would survive a funding lapse. For contractors and state agencies that have begun planning and procurement based on anticipated federal dollars, the distinction between “allocated” and “obligated” could determine whether projects proceed or stall.
It is also unknown how the roughly $652 billion in IIJA funds that remain unallocated will be handled if the law expires before they are distributed.
Analysis
The likeliest near-term outcome is a series of short-term continuing resolutions that extend current IIJA funding levels past the September 30 deadline while Congress negotiates a longer-term bill. This pattern, while frustrating for state transportation agencies that depend on funding predictability for multi-year capital programs, is consistent with decades of Congressional behavior on surface transportation law.
The deeper structural problem is the Highway Trust Fund’s insolvency. The federal gas tax of 18.4 cents per gallon has not been raised since 1993, and the shift toward electric vehicles and more fuel-efficient cars continues to erode its revenue base. Any serious reauthorization will eventually require Congress to confront this growing shortfall, either by raising the gas tax, implementing a vehicle-miles-traveled fee, or continuing to subsidize the trust fund from general revenues at ever-larger amounts.
Meanwhile, the projects already in motion, from ferry terminal electrification in Seattle to a $491 million interstate interchange reconfiguration in North Carolina, will continue to advance through multi-year obligation cycles. But the pipeline of new projects that state and local governments expected to begin with future IIJA dollars is at genuine risk of contraction. For an infrastructure system that the American Society of Civil Engineers has consistently graded as mediocre, a prolonged funding gap would compound decades of deferred maintenance.