Taxable Municipal Bonds
There are situations in which a governmental issuer will sell taxable municipal bonds because the federal government will not subsidize the financing of certain activities that do not provide a significant benefit to the public. In such cases, the federal government will not permit the tax-exemption that is a prominent feature of most municipal bonds.
Taxable municipals offer yields more comparable to those of other taxable sectors, such as corporate bonds or bonds issued by U.S. governmental agencies, than to those of tax-exempt municipals.
Build America Bonds (BABS) are an example of taxable municipal bonds. They were created under the American Recovery and Reinvestment Act of 2009 and, although taxable, have special tax credits and federal subsidies for either the bond issuer or holder. The growth of the taxable municipal market in recent years has been astounding. In the last five years alone, over $134 billion in taxable municipals have been issued.
If you are interested in learning more about Municipal bonds, either call (855) 846-ACAP or email [email protected].