Municipal Bonds’ Treatment in Jeopardy With Debt Ceiling: Taxes
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A reprieve the $3.7 trillion municipal bond market received in the U.S. budget agreement last week may be only temporary.
The deal extended several types of narrowly focused bond-related activities, such as funding school renovations or paying for construction projects in New York near the area of Sept. 11, 2001, terrorist attacks. It revised the alternative minimum tax, and without that, some types of bonds could have been unattractive to tens of millions of taxpayers. It didn’t eliminate the tax exemption on municipal bond income, an idea contemplated by lawmakers.