We used the US-TIMES energy-system model in conjunction with integrated assessment models for air pollution (AP3, EASIUR, InMAP) to estimate the consequences of local air pollutant (LAP) and carbon dioxide (CO2) policy on technology-choice, energy-system costs, emissions, and pollution damages in the United States. We report substantial policy spillover: Both LAP and CO2 taxes cause similar levels of decarbonization. Under LAP taxes, decarbonization was a result of an increase in natural gas generation and a near-complete phaseout of coal generation in the electric sector. Under a CO2 tax, the majority of simulated decarbonization was a result of increased electric generation from wind and solar. We also found that the timing of the CO2 and LAP taxes was important. When we simulated a LAP tax beginning in 2015 and waited until 2025 to introduce a CO2 tax, the electric sector was locked into higher levels of natural gas generation and cumulative 2010–2035 energy system CO2 emissions were 8.8 billion tons higher than when the taxes were implemented simultaneously. A scenario taxing CO2 and LAPs simultaneously beginning in 2015 produced the highest net benefits, as opposed to scenarios that target either CO2 or LAPs, or scenarios that delayed either LAP or CO2 taxes until 2025. Lastly, we found that net benefits compared to business as usual are higher under a regional versus a national LAP-tax regime, but that efficiency gains under the regional tax are not substantially higher than those under the national LAP-tax policy.