Municipal bonds are exempt from federal tax.
If they are issued by your state of residence, they are also exempt from state tax. If you live in a state with no income tax, it doesn't matter whether you buy in-state or out-of-state municipal bonds because neither will be taxed by your state. But if your state does have income tax, the in-state munis are exempt from both federal and state tax, while out-of-state munis are exempt from federal tax, but not state tax.
Additional caveat:
USTN interest is taxable at the federal level, but not by the state.
[Post edited by Hokie CPA at 01/12/2018 5:43PM]
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In response to this post by Hokie360)
Posted: 01/12/2018 at 5:36PM