Municipal Bond
What is Municipal Bond?
A bond issued by a state, city, or other local government in the U.S.
Understanding Municipal Bond
Municipal bonds, or munis, fund schools, roads, hospitals, and other public projects. Their interest is generally exempt from federal income tax, and often from state tax for residents of the issuing state.
Because of the tax benefit, munis usually pay lower yields than similar taxable bonds, so they tend to suit investors in higher tax brackets.