Along with their federal tax perks, some municipal bonds also carry state and local tax breaks. Munis issued by a state is exempt from state income taxes for residents of that state. For state-specific muni exposure, there are a few that cover California and New York debt, two of the largest muni markets.

For California exposure, investors can take a look at the iShares California AMT-Free Muni Bond ETF (NYSEArca: CMF), SPDR Nuveen Barclays California Municipal Bond ETF (NYSEArca: CXA) and PowerShares Insured California Municipal Bond Portfolio (NYSEArca: PWZ).

The iShares New York AMT-Free Muni Bond ETF (NYSEArca: NYF), PowerShares New York AMT-Free Municipal Bond Portfolio (NYArca: PZT) and SPDR Nuveen Barclays NY Muni Bond (NYSEArca: INY) provide exposure to New York debt.

Lastly, potential investors should be aware that the munis market has been rallying on its longest monthly winning streak in two decades, so any deals are less attractive. [Muni Bond ETF Rally Could Wane]

For more information on the munis market, visit our municipal bonds category.

Max Chen contributed to this article.