The exclusion of interest of state and local bonds from taxation by the federal government:

Question

Quizplus · Accepted Answer

The exclusion of interest of state and local bonds from taxation by the federal government decreases interest costs for state and local governments, as investors are willing to accept a lower interest rate due to the tax benefits. This can make borrowing cheaper for state and local governments compared to other forms of borrowing, such as private sector loans.

The Exclusion of Interest of State and Local Bonds from Taxation