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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.
This is essentially how tax-free municipal bonds work. Investors lend money to the government in exchange for periodic interest payments until the bond reaches its maturity date, at which point ...
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]
These muni bond funds offer tax-exempt income.Municipal bonds, sometimes referred to as munis, are issued by various government entities such as states, counties and municipalities.
[7] [15] Since the interest on the bonds is exempt from state and local taxes, lenders who purchase the bonds pass on this savings onto borrowers through lower interest rates. Tax-exempt bonds are similar to conventional loans in that the borrower must pay back the principle plus interest to the lender; however, tax-exempt bonds typically have ...
This is a list of U.S. states by credit rating, showing credit ratings for sovereign bonds as reported by the three major credit rating agencies: Standard & Poor's, Fitch and Moody's. The list is given as of May 2021.
Generally, municipal bonds are tax-free at the federal level. Residents of the same state as the issuer typically enjoy a state-level tax break as well. However, capital gains, if applicable, are ...
The alternative minimum tax (AMT) is a tax imposed by the United States federal government in addition to the regular income tax for certain individuals, estates, and trusts. As of tax year 2018, the AMT raises about $5.2 billion, or 0.4% of all federal income tax revenue, affecting 0.1% of taxpayers, mostly in the upper income ranges. [1] [2]
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