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In the Public Salary Tax Act (1939), which was codified as 4 U.S.C. § 111, Congress clarified the circumstances in which governmental salaries could be taxed. The Act stated that federal salaries could only be taxed if the state tax "does not discriminate against such officer or employee because of the source of such compensation."
A municipal bond, commonly known as a muni, is a bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal bonds is often, but not always, exempt from federal and state income taxation.
Michigan. Michigan’s flat state income tax rate rose for 2024 to 4.25%, ... Municipal bond interest. After-tax pension contributions. Roth IRA and Roth 401(k) withdrawals after age 59 1/2.
Build America Bonds are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder. Build America Bonds were created under Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act that U.S. President Barack Obama signed into law on February 17, 2009.
Roth Withdrawals. The easiest way to avoid taxes on your retirement money is to use a Roth account. Both IRA and 401(k) plans can be structured as Roth accounts, which don’t offer a tax ...
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Muni arb is a relative value strategy that seizes upon an inefficiency that is related to government tax policy; interest on municipal bonds is exempt from federal income tax. [1] [2] Because the source of this arbitrage is artificially imposed by government regulation, it has persisted (i.e., it has not been "arbed away") for decades. [3]
The rest of the century balanced new taxes with abolitions: Delaware levied a tax on several classes of income in 1869, then abolished it in 1871; Tennessee instituted a tax on dividends and bond interest in 1883, but Kinsman reports [59] that by 1903 it had produced zero actual revenue; Alabama abolished its income tax in 1884; South Carolina ...