State Tax-Exempt Income Fund

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State tax-exempt income fund

A mutual fund that seeks current income exempt from federal and a specific state's income taxes.

A mutual fund with earnings that are exempt from both federal taxes and state taxes. Generally speaking, state tax-exempt income funds are limited to investing in bonds issued in the state where the mutual fund is based. Most of the time, shareholders of these funds must also live in the same state to take advantage of the tax exemption.

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