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Since municipal bond interest is exempt from federal income tax, it is especially beneficial to high-income investors.True or False
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42 votes
42 votes
Since municipal bond interest is exempt from federal income tax, it is especially beneficial to high-income investors.True or False

User Gkephorus
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17 votes
17 votes

Answer:

False

Step-by-step explanation:

This statement is false. Municipal bonds, also known as munis, are issued by state and local governments to finance various public projects and infrastructure improvements. The interest earned on munis is generally exempt from federal income tax, and in some cases, it may also be exempt from state and local taxes for residents of the issuing jurisdiction. This tax-free feature makes munis an attractive investment for individuals in all tax brackets, not just high-income investors. However, it is worth noting that the tax benefits of munis may not be as valuable to investors in the highest tax bracket, since their marginal tax rate is already lower than the tax-free rate of return on munis.

User Nicholas Flees
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