If you’re buying municipal bonds after doing your taxes today, it may be too late.

The $3.8 trillion state and local debt market has hit record-high valuations thanks in part to the new $10,000 cap on state and local tax deductions, which has caused investors to seek out tax-free municipal bonds as a way to reduce their tax bills.

But any investor who buys now may have missed out on profiting from the so-called SALT trade. And the tax break...