Blue Wave May Curtail Muni Tax Break, Breckinridge Advisors Says

Conventional wisdom says a Joe Biden victory in the presidential election and a Democratic sweep of the U.S. House and Senate would boost state and local government finances and likely lead to higher taxes, increasing the value of the tax-exemption on municipal bonds.

But there’s a small chance that the municipal tax-exemption itself might be curtailed in a Blue Wave, according to Breckinridge Capital Advisors. Like President Barack Obama, Biden’s tax proposals include capping the value of most deductions at a 28% rate.

“Whether this deduction cap includes municipal interest is unclear, but many Biden advisors are veterans of ...