One of the yields investors are seeking more and more are tax free yields offered by municipal bonds.
Muni bonds are federally exempt on the interest received. They are subject to state and local tax. The heavier the tax bracket - the better the yield will be.
If a bond was issued at par and had a coupon rate of 4% and the investor is in the 30% tax bracket, the tax free rate of return would be figured out by dividing 4 by 100 - the tax bracket of 30. This would come out to 5.71%
Municipal bonds offer a chance to earn interest without taxation. If you buy a bond issued in your home state, you could be triple tax free.
Rating, coupon rate, geographical area and bracket are the main factors of whether someone should buy a muni bond.
http://www.brokerjobs.com/munibonds.htm
Muni bonds are federally exempt on the interest received. They are subject to state and local tax. The heavier the tax bracket - the better the yield will be.
If a bond was issued at par and had a coupon rate of 4% and the investor is in the 30% tax bracket, the tax free rate of return would be figured out by dividing 4 by 100 - the tax bracket of 30. This would come out to 5.71%
Municipal bonds offer a chance to earn interest without taxation. If you buy a bond issued in your home state, you could be triple tax free.
Rating, coupon rate, geographical area and bracket are the main factors of whether someone should buy a muni bond.
http://www.brokerjobs.com/munibonds.htm
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