How a $500,000 Position in This Schwab Muni ETF Pays a Married Couple in the 32% Bracket an Extra $6,500 a Year in After Tax Income

Schwab's Municipal Bond ETF, SCMB, offers tax-free income that can significantly boost after-tax returns for high earners. A $500,000 investment in municipal bonds yielding a 3.5% coupon would produce $17,500 in tax-free income. By contrast, the same amount in taxable bonds at the 32% federal rate plus 5% state tax would leave about $11,025 after $6,475 in taxes. The example demonstrates why munis are attractive to high-net-worth investors seeking tax efficiency, with SCMB providing broad exposure to the sector. Schwab Municipal Bond ETF (SCMB) launched in 2022, carries a 0.03% expense ratio, and tracks the ICE AMT-Free Core U.S. National Municipal Index. The tax advantages depend on federal, state, and local tax treatment.