Page 26 - Means Wealth 2020/2021 Perspectives

MUNICIPAL BONDS

hen a public body such as a city or state borrows money, it may issue
W promissory notes, also called debt, for this money. These notes are
called Municipal Bonds. The interest, which is usually paid on a semi-annual
basis, is exempt from Federal income taxes and from state and local taxes
where the issue originates. Municipal bonds issued for public purposes, such
as roads and schools, or those issued on behalf of non-profit organizations,
such as private hospitals and universities, are not affected by Alternative
Minimum Tax (AMT).

The Tax-Exempt Chart on the following page illustrates the reason why municipal
bonds or municipal bond funds might be appropriate for your portfolio.

This table shows the taxable yields which are equivalent to tax-exempt
yields under current Federal tax laws at rates in effect at the time of this
writing. The proposed 2021 tax brackets will reflect an inflation adjustment
to be provided by the IRS and does not take into account any potential tax
reform legislation.

Tax-exempt bond holders are required to report any tax-exempt interest
they receive. Although it must be reported, it will not be federally taxed or
taxed by the state of Maine if it is a Maine or Puerto Rico Municipal bond
and not subject to AMT. n
“ - Oscar Wilde “

Experience is simply the name we give our mistakes.

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