CHAPTER 12

Municipal Bonds: Keeping It Local

 

Another important segment of bonds to consider are municipal bonds, which are securities issued by local governments and their agencies. Often, they are referred to simply as “munis.” As with US Treasury securities (other than savings bonds), these bonds trade on the market. In contrast, the interest earned on them is usually exempt from federal income tax and is typically exempt from state and local income taxes as well, particularly if you live in the state in which they are issued. For people living in locations with high income tax, such as New York and California, this can be an especially ...

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