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 ?
By clarifying the requirements for establishing Muni Coops and providing technical assistance, we are empowering local governments to better serve their employees and more efficiently provide vital health care insurance coverage.
I was just kind of able to play my own golf," Muni He said after her round on Wednesday.
Both bills eliminate the AMT, which private activity muni bonds were subject to, and both would likely reduce the supply of tax-free municipal bonds, which could boost the prices of tax-free munis already in the market.
Martin stressed that it was important to work closely with the Muni Trust on the shows.
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.
During the meeting, the Maoist chairman complained to Muni that India was stopping the Maoists from getting back into power.
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.
A severe economic slowdown will make it difficult for some muni issuers to pay the promised interest to bondholders.
Muni, who most recently hosted the Scott Muni Show for six years on classic rock station WAXQ-FM, had suffered a stroke earlier this year.
The Muni went to Wilton not having won away during the season, with Wilton without their two top points scorers in Paul Mackell and Neil Hutchinson.
Even after a daring escape, Muni is unable to find true peace--and is eventually re-ensnared.