Interest on municipal bonds is generally exempt from federal income tax. Interest may also be exempt from state and local taxes.
Municipal bonds are not subject to federal taxes and, in many cases, no state taxes. If the bonds purchased are from a country other than the purchaser's country of residence, the home country may impose taxes on interest income from the bonds.
Bonds. Bonds used to finance local and state government projects such as buildings and highways are tax exempt at the federal level. Additionally, individuals who purchase bonds issued by state or local governments may not be required to pay state or local taxes on the interest.
“Tax Exempt” means that the interest portion of the debt service of the Notes is exempt from federal and, as the case may be, state and local income taxes on the bondholder. Therefore, given the bond's credit quality and maturity, the interest rate is lower than a taxable bond.
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