The interest earned on municipal bonds is often tax-free at the state level.

Name: The interest earned on municipal bonds is often tax-free at the state level.
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Municipal bonds are issued by state and local governments, and the interest earned on them is exempt from federal income taxes. In addition, many states also exempt the interest income earned on municipal bonds issued within their own state, making it tax-free at the state level as well.

The Interest Earned on Municipal Bonds Is Often Tax-Free at the State