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Bonds can provide passive income, some of which may be tax-free if you're investing in municipal bonds. The tax-equivalent yield formula can be a useful tool for comparing taxable and tax-free ...
Muni bonds are a more attractive option for investors in high-tax states and cities, so investors in those areas should be sure to calculate the tax-equivalent yield on potential muni investments ...
Interest income from most municipal bonds is excludable from gross income for federal income tax purposes, and may be exempt from state income tax as well, depending on the applicable state laws. [14] Internal Revenue Code section 103(a) is the statutory provision that excludes interest on municipal bonds from federal income tax. [15]
Taxation: Interest income from municipal bonds is often tax-exempt at the federal level and may also be exempt from state and local taxes if the investor resides in the issuing state. Interest ...
Positive, tax-free carry can reach into the double digits. The bet in municipal bond arbitrage is that, over a longer period of time, two similar instruments--municipal bonds and interest rate swaps--will correlate with each other; they are both very high quality credits, have the same maturity and are denominated in U.S. dollars.
Some income, such as municipal bond interest, is exempt from income tax. Federal receipts by source as share of total receipts (1950–2014). Individual income taxes (purple), payroll taxes/FICA (azure), corporate income taxes (green), excise taxes (orange), estate and gift taxes (yellow), other receipts (blue). [12]
The interest earned on municipal bonds is exempt from federal income tax (and in some cases, state and local tax as well), making them potentially attractive to investors in higher tax brackets.
Many systems impose tax at different rates for differing types (e.g., capital gains or salaries) or levels of income (e.g., graduated rates). In the United States, gross income includes all income realized from whatever source but excludes particular tax-exempt items, such as municipal bond interest. In 2010, the United Kingdom and the United ...
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