A nice, succinct explanation of the case for municipal bonds as well as for closed-end funds. I would add a few points. First, if you (readers of this post) choose to invest in munis (whether through NEA or some other means), you should do so in a regular taxable account, as opposed to a tax-sheltered account like an IRA, Roth IRA, or self-directed 401(k). (In fact, your brokerage might not even allow you to invest in munis inside a tax-sheltered account.) The reason is that tax-sheltered accounts only allow you to contribute so much each year, and so you want to use those precious dollars for investments that will serve you but don't come with any inherent tax advantages. Whereas if you have an account that's not tax-sheltered, that's a good place for investments that do come with inherent tax advantages! Second, I want to make sure readers don't miss the point that @slider2990 makes that it's the income from munis that are exempt from federal tax; if you sell an individual muni or a muni fund like NEA, any profit from the sale will be taxable. And third, if you're investing from outside the U.S., check the tax laws where you live, because even if income from U.S. munis is exempt from federal taxes in the U.S., there are countries, such as Canada, where income from U.S. munis are taxable.