Municipal Bond markets have seen changes after federal tax changes, but not as dramatic as had been feared.

The 2017 federal tax reforms have left many stakeholders, including state and local governments, uncertain about longer term effects. One such area is with municipal bonds, which were threatened to lose their tax-free treatment during early stages of the federal debate. While that proposal was successfully resisted, limits on tax deductions and new taxation of advanced refunding have left uncertainty in the markets.

Nearly one year later, Governing magazine reviews some early signs for effect. Their speed read summarizes the early returns, which suggest some impacts but not dramatic shocks:

The impact of the federal tax overhaul on the municipal bond market hasn’t been as bad as many feared.

But the elimination of so-called advanced refunding bonds has reduced the overall supply of municipal bond offerings.

While banks are retreating from the muni market, taxpayers in high-tax states are sheltering more of their income in municipal bonds.

States are on pace to issue 20 percent more new debt this year.

For more detail, see Governing magazine’s full article.