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Tax Loss Harvesting? Try Active Muni Bond ETFs TAXE & THYM

BY | ETF Database
10/21/2026 | 42 VIEWS
It’s tax loss harvesting season, with major shifts in bonds and rates driving investors to sell some of their debt assets into new segments. Muni bonds, for example, offer huge upside in reducing tax bills and adding solid yield. Active muni bond ETFs like the T. Rowe Price High Income Municipal ETF (THYM) and the T. Rowe Price Intermediate Municipal Income ETF (TAXE C+) can appeal as tax loss harvesting landing spots.Key Takeaways: As rates rise, with yields reaching multi-decade highs, investors may be looking to tax loss harvest. Active muni bond ETFs can provide a strong landing zone for those assets. Combining active adaptability and bottom-up construction with tax reduction, ETFs like THYM and TAXE can appeal. As a refresher, tax loss harvesting entails selling some funds at a loss to reduce tax bills. After harvesting those losses, many investors then reinvest those assets into other funds. So long as investors avoid the wash sale rule, which prevents investing those assets into funds too similar to the fund from which they came, tax loss harvesting holds real appeal. Finding the right fund in which to invest with those assets, then, becomes the key task. Active muni bond ETFs provide a powerful destination for those funds, for a few key reasons. Munis offer strong yields for investors moving from other fixed income categories, adding tax-free assets to portfolios. Reducing tax bills can help meet an inflationary landscape with a growing cost of living. Perhaps more common, however, is for investors to reinvest assets into similar categories while avoiding the wash sale rule. For investors selling indexed munis for a loss, active muni bond ETFs may be sufficiently different. Not only that, but on their own merits, active muni bond ETFs may be able to outperform their passive counterparts.Tax Loss Harvesting With THYM and TAXETHYM and TAXE offer an example of just how active muni bond ETFs can operate. Both ETFs lean on T. Rowe Price’s fundamental research capabilities to identify the strongest opportunities among muni bonds. What’s more, where passive muni bonds are slow to react or swap into appealing opportunities, active muni bond ETFs can adapt more quickly. THYM charges a 32 basis point (bps) fee to actively invest in long term, low to medium quality munis. The fund looks to generate income through a mix of holdings using broad fundamental research paired with sector and issuer-level analysis. THYM provided a 30-day SEC Standardized Yield of 5% as of September 30, according to T. Rowe Price data. See more: Is TCAL the Best Active Premium Income ETF for Yield? TAXE, meanwhile, charges a 24 bps fee to actively invest in intermediate duration munis of any credit quality. That broader remit sees its managers assess those bonds based on metrics like yields, prices, and effective maturity. TAXE has produced a 4.14% 30-day Standardized Yield as of September 30, per T. Rowe Price. Together, those two funds can invigorate a bond portfolio and offer a solid landing place for tax loss harvesting assets. As the rate picture shifts, that active, research-oriented approach can make the difference in the munis space, too. For more news, information, and analysis, visit our Active ETF Content Hub.

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