US Savings Bonds

Posts Tagged ‘tax exempt bonds’

Tax exempt bonds are bonds that are free of either federal taxes, state taxes, or local taxes. Usually United States governmental issued bonds are tax exempt bonds. US Savings Bonds, for example, are tax exempt bonds. These US savings tax exempt bonds include series EE US Savings Bonds, series HH US Savings Bonds, and other US Savings Bonds. 

What are the tax exempt bonds? What government bonds or securities’ interest is usually state tax exempt?

Interest income from direct obligations and bonds of the Federal Government and certain agency obligations is tax exempt from income taxation in all states (but, it is taxable at the federal level). 

The table below shows tax exempt bonds such that interest on the these obligations is generally exempt from state income tax: 

U.S. Treasury Bills, Notes, Bonds U.S. Savings Bonds – Series EE US Savings Bonds and Series HH US Savings Bonds Federal Home Loan Banks (FHLBS) Financing Corporation (FICO) General Services Administration Tennessee Valley Authority U.S. Postal Service Production Credit Association

Federal Land Banks Federal Intermediate Credit Bank Banks for Cooperatives Federal Farm Credit Banks Student Loan Marketing Association General Insurance Fund Commodity Credit Corporation Federal Deposit Insurance Corp

The following bonds are not tax exempt bonds and the interest on the following bonds is generally subject to state income tax:

• Federal National Mortgage Association (FNMA – Fannie Mae)

• Federal Home Loan Mortgage Corporation (FHLMC – Freddie Mac)

State tax exempt interests are usually found in government securities such as Tax Exempt Bonds. State tax exempt interests are exempt from either:

• federal taxes,
• state taxes, or
• local taxes.

US government bonds

Most United States government bonds are Tax Exempt Bonds or tax free bonds. US Savings Bonds, being government issued bonds, are indeed Tax Exempt Bonds. These US Savings Bonds that are tax free include:

• series EE US Savings Bonds,
• series HH US Savings Bonds, and
• other US Savings Bonds.

Bonds with state tax exempt interests are attractive investments

The government issued bonds with state tax exempt interests, federal tax exempt interests or local tax exempt interests are popular investments among conservative investors. Usually investors who invest a large amount of money in bonds and are in high tax brackets are more interested in Tax Exempt Bonds with state tax exempt interests. For a list of government Tax Exempt Bonds and securities, see below.

• Tax Exempt Bonds