Public-purpose bond(redirected from Public-Purpose Bonds)
A municipal bond that is issued in order to finance public works. For example, a city may issue a public purpose bond to build a road or school, which improves the city but does not directly attract private investment. The federal government does not tax the interest on a public-purpose bond. This exemption occurs automatically, unlike a private purpose bond, which must prove that it benefits the public in some way to qualify for the tax exemption.