Question

Municipal securities issued by which of the following are triple tax exempt?

1) State governments
2) Federal governments
3) Local governments
4) None of the above

Answer 1

Municipal securities issued by local governments are triple tax exempt, meaning the interest income from these securities is exempt from federal, state, and local income taxes.

Step-by-step explanation:

Municipal securities issued by local governments are triple tax exempt. This means that the interest income from these securities is exempt from federal income tax, as well as state and local income taxes.

For example, if you live in a state that has an income tax, and you invest in municipal securities issued by your local government, you will not have to pay state income tax on the interest income you earn from those securities. Similarly, the interest income will also be exempt from local income tax.

Therefore, the correct answer to the question is 3) Local governments.