Why Buy Municipal Bonds Page

For an investor in the top tax bracket (37% + 3.8% NIIT = 40.8% total federal rate), a is equivalent to a 6.1% taxable yield .

: Investors should evaluate munis based on what a taxable bond would need to pay to match their return. why buy municipal bonds

: Despite a slower economy, state and local governments maintain strong liquidity positions and healthy "rainy-day" reserves to offset potential slowdowns. For an investor in the top tax bracket (37% + 3

: Expected rate cuts by the Federal Reserve are likely to drive cash from money market funds back into longer-term, higher-yielding assets like munis. : Expected rate cuts by the Federal Reserve

: 2026 is expected to have high issuance. If demand from ETFs and retail buyers does not keep pace, total returns could lag.

: Bonds bought at a "market discount" may trigger capital gains taxes (de minimis tax), and some bonds may be subject to the Alternative Minimum Tax (AMT).