triple tax exempt

triple tax exempt

Of, relating to, or being a municipal bond, trust, or fund paying interest that is free of federal, state, and local income taxation for individuals residing in certain localities. This situation results from the fact that most but not all states and localities exempt municipal bond interest from taxation if the bonds are issued within that particular state. Triple tax exemption is of particular interest to investors residing in high-tax states and localities, such as New York City.

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triple tax exempt

In the United States, describing a municipal bond with returns exempt from all federal, state, and local, taxes. Most municipal bonds are exempt from federal taxes, but are only exempt from state and local taxes if the bondholder is a resident of the state and locality in which the bond is issued. A triple tax exemption is an attractive feature of municipal bonds that encourages locals to invest in them. It is particularly important in states and/or localities with high capital gains taxes, such as the State of Oregon.