Municipal Bonds

“When you change the way you look at things, the things you look at change.” – Wayne Dyer

Municipal Bonds

When a municipality such as a city or state borrows money, it may issue promissory notes, also called debt, for this money. These notes are called Municipal Bonds. The interest, which is usually paid on a semi-annual basis, is exempt from Federal income taxes and from state and local taxes where the issue originates. Municipal bonds issued for public purposes, such as roads and schools, or those issued on behalf of non-profit organizations, such as private hospitals and universities, are not affected by Alternative Minimum Tax (AMT). The Tax-Exempt Chart on the following page illustrates the reason why municipal bonds or municipal bond funds might be appropriate for your portfolio. This table shows the taxable yields which are equivalent to tax-exempt yields under current Federal tax laws at rates in effect at the time of this writing. The proposed 2023 tax brackets reflect an inflation adjustment provided by the IRS and do not take into account any potential tax reform legislation. Please note that tax-exempt bond holders are still required to report any taxexempt interest they receive.