Use this button to switch between dark and light mode.

All About Tax-Exempt Muni-Bonds

August 06, 2024 (3 min read)

A common way for states and localities to supply needed capital facilities, such as buildings, roads, and libraries, is to finance them. Instead of competing with nongovernmental borrowers, most choose to use a special governmental advantage, issuing bonds whose interest payments are exempt from federal income tax. The tax code, under I.R.C. § 103(a), allows interest income paid to the owner of a tax-exempt security (i.e., a state or local bond) to be excluded from the owner's income when determining gross income for federal income tax purposes. 

Read now »

Related Content

  • Municipal Debt Offerings: General Obligation Bonds and Revenue Bonds
    Review the basics of municipal bonds—that is, bonds issued by municipalities (e.g., political subdivisions including cities, counties, states, their agencies and special districts, and U.S. territories and possessions) and certain 501(c)(3) nonprofit organizations under the tax code. This practice note discusses features of general obligation bonds and revenue bonds, and reviews the basic features and conditions of tax-exempt debt.
  • Municipal Bond Offering Key Documents
    Learn more about the key documents in a municipal bond offering. These documents differ from those of a commercial debt transaction in two important respects. First, the lien of bondholders in the security for the bonds may be created more simply than the security for a lender in a commercial debt transaction. Second, a public offering of bonds will include documents that are not present in a commercial debt transaction.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    

PRACTICAL GUIDANCE CUSTOMER EMAIL EDITION ON THE WEB

Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+

Tags: