Municipal bond closed-end funds

Municipal CEFs hold bonds issued by states, cities and their agencies, whose interest is generally exempt from federal income tax and, for single-state funds, often from that state's income tax as well. They are among the most numerous CEF categories and among the most leveraged, typically financed with tender-option bonds or preferred shares.

Tax-equivalent yield

To compare a tax-exempt yield with a taxable one: tax-equivalent yield = tax-exempt yield ÷ (1 − marginal tax rate). A 4% tax-exempt yield is worth 5.88% to an investor in a 32% bracket. The calculator on the Municipal page uses your own inputs; it does not know your bracket, your state, the alternative minimum tax, or the taxable portion of any particular fund's distributions, and it must not be read as tax advice.

Not every dollar a municipal CEF distributes is tax-exempt: capital gains and taxable income components are reported separately on the fund's tax notice.