Ask Terry Questions Tax-free bonds

Tax-free bonds

By Terry Savage on March 29, 2024 | Investments

Are there any investments that are tax free on both the state and federal level? And are safe, your original investment is protected. And is there a trusted source where I can educate myself?

Terry Says

There are municipal bonds that are free from both federal and state taxes, (and from local taxes, if you live in a high tax city.) The income they pay may depend on the general obligation of the municipality or state, so make sure you buy highly-rated bonds. And some of these bonds depend on the revenue from a certain project, which might make them more, or less, speculative.
Read this:

Oh, and one other thing. You’ll buy these bonds through a brokerage firm. And the price they quote you is likely to include a profit built in for themselves! So if you are not concerned about local taxes, check into a muni bond fund offered by Fidelity or Vanguard. In that case, check the average maturity of the bonds within, and the rating of the bonds.



a personal
finance question