What is a "triple tax-free" municipal bond?
Answers | 1
Lynn, a triple tax free muni bond is one that avoids, 1-federal tax, 2-state tax and 3-local taxes. To benefit from all 3, you may need to reside in the locality of the bond issuer. As an example, I live in CA if I buy "triple tax free bond" from an issuer in PA I probably will not be able to avoid the tax from interest on my state income tax return. One additional note is that because the interest being paid is "tax free" it will likely be lower than a taxable bond being issued by a corporation. So your income tax rate will have an impact on your decision.