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Tax-Free Municipal Bonds

For Today’s Tax-Conscious Investor

For High-Net-Worth individuals, tax-free municipal bonds are among the most popular types of investments available today. Under present federal income tax law, the interest income you receive from investing in municipal bonds is not subject to federal income taxes.

In most states that levy income taxes, interest income received from bonds issued by governmental units within that state is also exempt from state and local taxes. Interest income from bonds issued by U.S. territories and possessions is exempt from federal, state and local income taxes.

Tax-exempt municipal bonds offer a wide range of benefits, including:

  • Attractive current income free from federal and, in some cases, state and local taxes

  • A predictable stream of tax-free income

  • A wide range of choices to make your investment objectives regarding investment quality, maturity, choice of issuer, type of bond and geographical location

  • Liquidity in the event you must sell before maturity

Municipal securities consist of both short-term issues (often called notes) and long-term issues (bonds). Short-term notes typically mature in one year or less and are used by an issuer to raise money in anticipation of future revenues, while bonds are usually sold to finance capital projects over the longer term.

The two basic types of tax-exempt municipal bonds are:

  • General obligation bonds – Principal and interest are secured by the full faith and credit of the issuer and usually supported by either the issuer’s unlimited or limited taxing power.

  • Revenue bonds – Principal and interest are secured by revenues derived by tolls, charges or rents from the facility built with the proceeds of the bond issue. Public projects financed by revenue bonds include toll roads, bridges, airports, water and sewage treatment facilities, hospitals, subsidized housing, etc.

There’s no surprise as to why tax-exempt municipal bonds are so popular among serious investors. If you’re interested in purchasing a tax-exempt municipal bond, inquire here. For more information, speak to one of our tax-free municipal bond specialists today by contacting us or calling 877-467-0070.