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The Fidelity Tax-Free Bond Fund aims to provide a high current yield that is exempt from federal income tax. ... higher federal tax-free income than other muni bond funds that invest in investment ...
Similarly, muni bond funds can be an attractive way to get a diversified stream of tax-advantaged income, but a fund may own bonds issued in many different states, meaning you won’t get the full ...
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 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.
That perception could thus potentially allow a local government to borrow at a lower interest rate, saving its taxpayers' money over the life of the bonds. Despite that advantage, many states, such as California under Proposition 13, do not allow local governments to issue unlimited-tax general obligation debt without a public vote.
The interest income is exempt from federal income tax for the recipient—a treatment similar to that for interest income from municipal bonds. Tax anticipation notes are short term notes, issued at a discount, with a maturity period usually less than a year or a stated future date.
Tax-free municipal bonds are not just a source of investment but also a significant contributor to public projects such as roads, schools and hospitals. These debt instruments are issued by local ...
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.
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