SIE practice questionmediumMunicipal Bonds - Taxation
Interest on municipal bonds is typically exempt from which tax?
- ACapital gains tax
- BState income tax for non-residents
- CFederal income tax✓ Correct answer
- DSocial Security tax
Explanation
Why C — Federal income tax
Municipal bond interest is usually exempt from federal income tax, but not always state (esp. for non-residents), and capital gains and Social Security tax are different.
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