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The Fidelity Tax-Free Bond Fund aims to provide a high current yield that is exempt from federal income tax. The fund invests at least 80 percent of its assets in investment-grade securities whose ...
3. Series I bonds and EE bonds. While not as tax-friendly as municipal bonds, Series I bonds and EE bonds offer some attractive tax advantages. The interest earned is typically free from state and ...
Fund assets: $3.1 billion *Note: To compare municipal bond funds with taxable funds, investors calculate a taxable equivalent yield, which can be determined by dividing the municipal yield by (1 ...
For example, assume an investor in the 38% tax bracket is offered a municipal bond that has a tax-exempt yield of 1.0%. Using the formula above, the municipal bond's taxable equivalent yield is 1.6% (0.01/(1-0.38) = 0.016) - a figure which can be fairly compared to yields on taxable investments such as corporate or U.S. Treasury bonds for ...
The State and Local Government Series (SLGS) is issued to government entities below the federal level which have excess cash that was obtained through the sale of tax-exempt bonds. The federal tax code generally forbids investment of this cash in securities that offer a higher yield than the original bond, but SLGS securities are exempt from ...
These rules prevent the avoidance of tax that might otherwise be available by characterizing the repayment as a capital gain, which is taxed at a lower rate, or by deferring the recognition of income until the bond is repaid at maturity. There are a number of exceptions to the original issue discount rule, including: Tax exempt obligations
Municipal bonds pay interest that is federally tax-free, and it’s often also exempt in the state where it is issued. The fund has an intermediate duration of 6.5 years and a current yield of 3.57%.
The fund's charter, prospectus and the applicable government regulations specify the types of investments the fund manager is permitted to buy. Some funds invest in stocks, others in bonds, and some in very specific things (for instance, tax-exempt bonds issued by the state of Florida in the USA).
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