SIE practice questionmediumMunicipal Bonds - Tax Considerations
Interest on municipal bonds is generally exempt from:
- AFederal income tax✓ Correct answer
- BState income tax in all cases
- CCapital gains tax
- DAlternative minimum tax
Explanation
Why A — Federal income tax
Municipal bond interest is federally tax-exempt. It is not always state tax-exempt, and capital gains and AMT rules may still apply.
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