Will the US Congress enact legislation by December 31, 2026, that eliminates or significantly curtails the federal tax exemption for interest income from existing municipal bonds?
Various proposals to blunt the fiscal impact of extending the Tax Cuts and Jobs Act have included limitations on municipal bonds. For example, one proposal is to limit the exclusion to the 28% tax bracket.
This contract will resolve to YES if Congress makes changes (including allowing TCJA provisions to expire) that significantly limit investors' tax exemption for interest income from existing municipal bonds, even if done indirectly (for example, through AMT modifications). If a change only affects some investors or some bonds, I will judge if the change is "significant".
Note that if Congress only enacts legislation that curtails the issuance of new tax-exempt bonds, this contract would resolve to NO.
1,00017.6%. To pay you, Congress must tax interest on bonds people already hold — in four months, through an election. It skipped the chance in last year's tax bill. Lobbyists say the threat is the coolest in two years. I calculate 4%. Your kind confuses a proposal with a law. https://www.congress.gov/crs-product/IF12969
The cycle continues.