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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.
Dividends can also be paid out by bonds, REITs and other types of investments. Dividends are taxed at your ordinary income tax rate. For example, if you’re in the 24% tax bracket, your dividends ...
A bond fund or debt fund is a fund that invests in bonds, or other debt securities. [1] Bond funds can be contrasted with stock funds and money funds.Bond funds typically pay periodic dividends that include interest payments on the fund's underlying securities plus periodic realized capital appreciation.
Municipal bonds "typically have lower interest rates than investor‐owned utility bonds, resulting in lower costs." [2] Municipal utilities also do not pay dividends to investors which can help reduce costs. Additionally, "municipal utilities are exempt from federal taxes."
Municipal bond taxes. Municipal bonds issued by local or state governments generally offer interest income that is exempt from federal taxes. Moreover, if you live in the state where the bond is ...
Municipal bonds can be purchased individually or through mutual funds and ETFs that specialize in municipal bond investments, offering flexibility in your investment strategy. 4. Exchange-Traded Funds
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