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Tax-Exempt Bond

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Tax-exempt bond
A bond usually issued by municipal, county, or state governments whose interest payments are not subject to federal and, in some cases, state and local income tax.

Tax-Exempt Bond
A bond issued by a local or state government. Municipal bonds are usually used to raise capital for improvements in infrastructure or other aspects of the municipality. For example, a city or school district may issue a tax-exempt bond to build a new school or a new playground. They are called tax-exempt bonds because they are exempt from federal income taxes and sometimes from state and local taxes as well. Tax-exempt bonds usually pay lower coupons than corporate bonds, but because the yield is tax-free, the after-tax basis may be higher for the tax-exempt bond. Risk varies according to the municipality and the particular type of bond.

tax-exempt bond


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Yields on tax-exempt bonds maturing in less than 10 years hit a six-year low in the week ended Aug.
The HDC Board authorized a total of $79 million in tax-exempt bonds to provide construction and permanent financing.
The board of the city-run Industrial Development Agency voted 11-1-1 in favor of the $259 million in tax-exempt bonds for the Yankees and 13-0 for the Mets’ $83 million, according to an IDA spokesman.
 
 
 
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