Also found in: Dictionary, Thesaurus, Acronyms, Wikipedia.

Municipal 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 bond to build a new school or a new playground. Municipal bonds are exempt from federal income taxes and sometimes from state and local taxes as well. Municipals usually pay lower coupons than corporate bonds, but because the yield is tax-free, the after-tax basis may be higher for a municipal bond. Risk varies with the municipality and the particular type of municipal bond. It is sometimes called a municipal improvement certificate.


Municipal bond (muni).

Municipal bonds are debt securities issued by state or local governments or their agencies to finance general governmental activities or special projects.

For example, a state may float a bond to fund the construction of highways or college dormitories.

The interest a muni pays is usually exempt from federal income taxes, and is also exempt from state and local income taxes if you live in the state where it was issued.

However, any capital gains you realize from selling a muni are taxable, and some muni interest may be vulnerable to the alternative minimum tax (AMT).

Munis generally pay interest at a lower rate than similarly rated corporate bonds of the same term. However, they appeal to investors in the highest tax brackets, who may benefit most from the tax-exempt income.

References in periodicals archive ?
The Muni mobile payment app will include the following features:
I don't know about the Muni, but with the Park and Dare Theatre in Treorchy, money went from miners' pay into the venue.
Even though a muni might be tax-exempt at issue, investors trading munis in secondary markets may be taxed on their investment in this bond.
They take that away because of austerity, but when everything gets better they will never get the Muni back.
In the event of default, owners of high-quality muni bonds would likely suffer some price declines in their issues if they sell prior to maturity.
McGregor says investors should ask their brokers for details on individual munis before investing; muni funds reveal the ratings and the maturities of the bonds they hold.
With the other game between Gary Bell and Paul Hutchinson being halved, the Muni finished 7-5 up to win the match 14-10.
A native of New Jersey, Muni received his formal education at Oberlin Conservatory of Music in vocal performance, conducting and theater work, studying with Herbert Blau.
But, in November, The Muni Working Group - including representatives from Pontypridd Town Council, Cylch Cymreig, Artis Community, Coal-fields Regeneration and the YMCA - agreed to lease the building in order to secure the future of the much-loved facility.
The Muni B team were at home to high-flying West Midlands Police, who defeated Sherwood Park in The Walker Trophy, so the hosts' expectations were low.
In a slightly different vein, the Michael Schenker Group will be at The Muni on the same night.
Long-term bond funds are likely to lose value when interest rates rise, therefore the principal you lose might outweigh the extra yield you receive with a long-term muni fund.