Tax Facts

7668 / Is interest on municipal bonds tax-exempt if payment is guaranteed by the United States or corporations established under federal law?

Interest on bonds issued by states, territories, and possessions (or their political subdivisions), which would otherwise be exempt from federal income tax, may not be exempt if payment of interest or principal is federally guaranteed.1

Generally, an obligation issued after 1983 is federally guaranteed if payment of principal or interest (i...

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