Municipal bonds that are issued to pay for essential public projects are exempt from federal taxation.

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Municipal bonds that are issued to pay for essential public projects, such as schools, hospitals, and infrastructure, are exempt from federal taxation under certain conditions. Investors who purchase these bonds do not have to pay federal income tax on the interest they earn from them. This tax-exempt status makes municipal bonds an attractive investment option for individuals who are looking for tax-efficient ways to generate income. However, it's important to note that not all municipal bonds are tax-exempt, and the rules governing their tax treatment can be complex.

Municipal Bonds That Are Issued to Pay for Essential Public