T. Rowe Price California Tax-Free Bond Fund

T. Rowe Price California Tax-Free Bond Fund is an open-end mutual fund specializing in municipal bonds issued within California. The fund’s chief objective is to deliver the highest level of income exempt from both federal and California state income taxes, making it particularly attractive for investors seeking tax-advantaged sources of income, especially California residents. It primarily invests in investment-grade municipal securities, targeting a diversified portfolio across sectors such as education, healthcare, water and sewer, and general obligation bonds, with a focus on longer-duration issues to capture higher yields. As of mid-2025, the fund boasts a substantial asset base, with hundreds of individual bond holdings and an effective duration of approximately seven years. Managed by a seasoned team, it maintains an expense ratio competitive within its peer group and pays dividends monthly. By pooling California-specific municipal bonds, this fund plays a crucial role in supporting state and local infrastructure projects, while providing investors with income largely shielded from both federal and state taxation, underscoring its significance in long-term portfolio planning for income-oriented investors in higher tax brackets.