Higher post-merger yields for Nuveen (NYSE: NQP) state muni funds

Rhea-AI Filing Summary

Nuveen’s proposal to merge several state-specific municipal funds into Nuveen Municipal High Income Opportunity Fund (NMZ) compares after-tax earnings for shareholders who would lose state tax exemption. Using industry convention, yields for NXJ, NQP, and the Missouri fund are “grossed up” by each state’s maximum tax rate.

As of July 31, 2025, common earnings yields were 3.30% for NXJ, 3.54% for NQP, 3.32% for the Missouri fund, and 6.17% for NMZ. On a state tax adjusted equivalent basis, these become 3.70%, 3.65%, and 3.49% versus NMZ’s 6.17%. The table shows gains of about 2.5 percentage points in state tax adjusted equivalent rates for each state fund, indicating higher earnings even after losing state tax exemption.

Filed by Nuveen Municipal High Income Opportunity Fund

(Commission File No. 333-290590)

pursuant to Rule 425 under the Securities Act of 1933, as amended,

and deemed filed pursuant to Rule 14a-6 under the Securities Exchange Act of 1934, as amended

Subject Company: Nuveen Pennsylvania Quality Municipal Income Fund

(Commission File No. 811-06265)

 

Nuveen New Jersey Quality Municipal Income Fund (NXJ)

Nuveen Pennsylvania Quality Municipal Income Fund (NQP)

Nuveen Missouri Quality Municipal Income Fund (NOM)

Nuveen Municipal High Income Opportunity Fund (NMZ)

Supplemental Material for Proxy Advisory Firm

February 3, 2026

Below is additional information related to the Joint Proxy Statement/Prospectus dated December 17, 2025, and the Joint Proxy Statement dated December 19, 2025. This supplemental disclosure is in response to a proxy advisory firm’s inquiry about the impact of the loss of state tax exemption.

When comparing municipal yields and the relative impact of state tax rates, industry convention is to gross-up yields by the maximum state tax rate, which is the approach used for this merger. The table below grosses up the common earnings yield for NXJ, NQP, and NOM by each state’s maximum tax rate to arrive at a state tax adjusted equivalent rate. When comparing these state tax adjusted equivalent rates to the NMZ post-merger common earnings rate, shareholders in NXJ, NQP, and NOM would realize an earnings gain.

Shareholders of NXJ, NQP, and NOM experience no negative impact from losing their state tax exemption on earnings post-merger because NMZ’s earnings yield significantly exceeds that of NXJ, NQP, and NOM. The state fund shareholders experience a net increase in tax adjusted yields post-merger despite losing their state tax exemption as is shown in the state tax adjusted equivalent rate change row below.

· Isolating the taxable equivalent yield impact from the loss of the state tax exemption for NXJ, NQP, and NOM shareholders results in higher common earnings on a before- and after-tax basis for those common shareholders remaining in the fund post-merger. The state tax adjusted equivalent rate uses each state’s maximum tax rate.

	As of July 31, 2025
	NXJ	NQP	NOM	NMZ Post- Merger
Common Earnings Yield	3.30%	3.54%	3.32%	6.17%
Change	+2.87%	+2.63%	+2.85%	N/A
Max State Tax Rate	10.75%	3.07%	4.80%	N/A
State Tax Adjusted Equivalent Rate	3.70%	3.65%	3.49%	6.17%
Change	+2.47%	+2.52%	+2.68%	N/A

FAQ

How does the Nuveen (NQP) merger affect earnings yields for state fund shareholders?

The merger compares current earnings with NMZ’s higher 6.17% common earnings yield. After adjusting NXJ, NQP, and the Missouri fund for state tax rates, each shows about a 2.5 percentage point gain in state tax adjusted equivalent earnings rates post-merger.

What is the NMZ post-merger common earnings yield compared to NXJ and NQP?

NMZ’s post-merger common earnings yield is 6.17%, versus 3.30% for NXJ and 3.54% for NQP. This large gap underpins the analysis showing that, even without state tax exemption, state fund shareholders would see higher effective earnings.

How are state tax adjusted equivalent rates calculated in the Nuveen (NQP) analysis?

The analysis follows industry convention by “grossing up” each fund’s common earnings yield using the maximum state tax rate. For example, NXJ’s 3.30% yield becomes a 3.70% state tax adjusted equivalent rate when applying New Jersey’s 10.75% maximum tax rate.

Do Nuveen (NQP) shareholders lose out by giving up state tax exemption in the merger?

According to the table, shareholders of NXJ, NQP, and the Missouri fund do not experience a negative impact. Their state tax adjusted equivalent rates increase by roughly 2.47% to 2.68% because NMZ’s 6.17% earnings yield is significantly higher than the standalone state fund yields.

What are the maximum state tax rates used for NXJ, NQP, and the Missouri fund?

The analysis uses maximum state tax rates of 10.75% for NXJ’s state, 3.07% for NQP’s state, and 4.80% for the Missouri fund. These rates are applied to gross up each fund’s earnings yield to a state tax adjusted equivalent rate for comparison with NMZ.

How much do state tax adjusted equivalent rates increase for Nuveen (NQP) and peers post-merger?

The state tax adjusted equivalent rate change row shows gains of 2.47 percentage points for NXJ, 2.52 points for NQP, and 2.68 points for the Missouri fund. These increases indicate higher effective earnings for state fund shareholders after combining into NMZ.