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For example, imagine you pay federal tax at a 24 percent rate and state tax at a rate of 6 percent, and the municipal bond offers a yield of 3 percent.
These debt instruments are issued by local or state governments, attracting investors for their provide tax-advantaged income. The interest earned from these bonds is typically exempt from federal ...
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 Best Tax ...
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]
The arbitrage manifests itself in the form of a relatively cheap longer maturity municipal bond, which is a municipal bond that yields significantly more than 65% of a corresponding taxable corporate bond. The steeper slope of the municipal yield curve allows participants to collect more after-tax income from the municipal bond portfolio than ...
Interest income from corporate bonds is typically subject to federal income tax and may also be subject to state and local taxes. Yields: Municipal bonds generally offer lower yields when compared ...
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