Taxation with representation ain’t so hot either.
—Gerald Barzan, humorist
The affects of the federal tax system vary as to how investments are taxed. It does depend on your tax bracket and the type of investment you have. Having an understanding of the tax implications of your investments can make a big difference to your return on investment (ROI) as well as the type of investments that would be most suitable to you.
There are several types of tax implications that can occur. You can either have:
• Completely tax exempt. This means that it is exempt from tax completely for both federal and state taxes. Municipal bonds issued by the state where you live would be an example of this.