Think it’s time to sell – or avoid – tax-advantaged municipal bonds ahead of the upcoming tax battle?
Think again. There are several compelling reasons why muni bonds are still buys for most income-focused investors.
First, the top federal tax bracket will still be a hefty 35%. Which means, if you’re a top earner, munis will still boost your yield by more than one-third.
No matter what tax plan is approved, municipal bonds will continue to be tax-free at the federal level. The GOP isn’t touching the federal income tax exemption for municipal bonds, which means win or lose, Uncle Sam won’t touch that income (which means tax-equivalent yields up to 9.6%, which we’ll discuss shortly, will still be in play).…