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Tax-Exempt Interest Income: Your Path to Tax-Free Earnings

The article from MSN Money discusses the concept of tax-exempt interest income, which refers to earnings from investments like municipal bonds that are not subject to federal income tax, and sometimes state and local taxes as well. It explains that these investments are particularly attractive to investors in higher tax brackets because they can keep more of their investment returns. The piece outlines how tax-exempt interest can come from various sources, including bonds issued by state and local governments, and highlights the benefits such as lower risk compared to stocks and a steady income stream. Additionally, it touches on the considerations investors should keep in mind, like the potential for lower yields compared to taxable investments, the importance of understanding the tax implications in one's specific state, and the need to evaluate the creditworthiness of the bond issuer. The article also advises on how to report tax-exempt interest on tax returns, emphasizing that while the income is not taxed, it must still be reported to the IRS.

Read the Full MSN Article at:
[ https://www.msn.com/en-us/money/other/tax-exempt-interest-income-your-path-to-tax-free-earnings/ar-AA1wvAnu ]