Overview of the Taxable Municipal Market

This document is a report that outlines the development and characteristics of the taxable municipal bond market. It begins by detailing the historical context, noting that the market emerged after the Tax Reform Act of 1986, which restricted the issuance of tax-exempt bonds. The report presents data on the growth of taxable issuance over the years, highlighting significant increases in 2009 and 2010 due to the Build America Bonds program. It explains the factors influencing the market, including changes in federal tax laws and interest rates. The report discusses the taxability of municipal bonds, emphasizing that bonds not meeting certain IRS criteria are taxable. It also describes federal programs that supported taxable bond issuance, such as direct-pay bonds and tax credit bonds, and notes the expiration of many of these programs. The document concludes by considering the implications for investors, including tax advantages and risks associated with taxable municipal bonds.