Tax-Exempt Bonds

Tax-Exempt Bonds are bonds issued by government entities or certain non-profit organizations that are exempt from federal income tax and, in some cases, state and local taxes.

The interest income earned by investors from these bonds is not subject to federal taxation, making them an attractive investment option for individuals in higher tax brackets. Examples include municipal bonds, which are often used to finance public projects such as schools, highways, and hospitals. The tax-exempt status helps lower borrowing costs for issuers while providing investors with tax savings.