Kathy lives in State A and owns a municipal bond issued by State B. The interest earned on this bond is most likely to be exempt from taxation at which of the following levels?

Question

Quizplus · Accepted Answer

Interest earned on municipal bonds is typically exempt from federal income tax. However, if the bond is issued by a state or municipality other than the one where the taxpayer resides, it may be subject to state and local taxes in the taxpayer's home state.

Kathy Lives in State a and Owns a Municipal Bond