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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.
Muni bonds are a more attractive option for investors in high-tax states and cities, so investors in those areas should be sure to calculate the tax-equivalent yield on potential muni investments.
General obligation bonds: This type of municipal bond allows the government to tax residents in order to pay back bond holders. They aren’t necessarily backed by a specific government project ...
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 ...
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 .
Most jurisdictions only allow bonds to be floated based upon a portion (usually capped at 50%) of the assumed increase in tax revenues. For example, if a $5,000,000 annual tax increment is expected in a development, which would cover the financing costs of a $50,000,000 bond, only a $25,000,000 bond would be typically allowed.
The post Municipal Bonds vs. Corporate Bonds appeared first on SmartReads by SmartAsset. Bonds often play an important role in a well-rounded investment portfolio. While both municipal and ...
Revenue Bond of the City of New York, issued 3. June 1858, signed by mayor Daniel F. Tiemann. A revenue bond is a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds, rather than from a tax.