Build America Bonds Law and Legal Definition

Build America Bonds (BABs) are taxable governmental bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder.

There are three types of BABs:

a. BABs (Tax Credit);

b. BABs (Direct Pay); and

c. Recovery Zone Economic Development Bonds, (RZEDBs).

Each type has a different subsidy, a different purpose for which it may be issued, and other varying rules.