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

References in periodicals archive ?
Tax Exempt Bonds one vacancy (with additional experience in exempt organizations preferred).
The Tax Exempt Bonds Division is part of the Governmental Entities division of the IRS Tax Exempt and Governmental Entities Division.
ATEBT owned four participating tax exempt bonds that bear interest rates of 9%," said Stuart J.