Planning for lower premiums shouldn't include shifting to municipal bonds, however, because tax exempt interest
income is counted in your MAGI for this purpose.
Low Tax Exempt Interest
Rates: While today's tax exempt rates are almost identical to taxable rates, historically tax-exempt rates have been, on average, 1% lower than taxable rates.
The adjusted net minimum tax for any year is the AMT for that year reduced by the amount that would be the AMT if: (1) the only adjustments were those concerning the limitations on certain deductions (such as state taxes, certain itemized deductions, the standard deduction and personal exemptions); (2) the only preferences were those dealing with depletion, tax exempt interest
, and small business stock; and (3) the limit on the foreign minimum tax credit did not apply.
Based on the interest portfolio, the partnership expects to earn about $600 of tax exempt interest
and about $600 of taxable interest.
First, further reductions were suggested in the benefits that property-liability insurers received from tax exempt interest
and dividends and second, a stiff new minimum tax was proposed for these companies.
These discounts qualified for treatment as tax exempt interest
under Code Section 103(a).