Is Bond Interest Taxable?

Question: Is bond interest taxable?

Answer: That depends on the type of bond. For example:

Corporate bond interest is taxable.

Municipal bond interest is generally not subject to federal income tax.

Treasury bond interest is free from state and local income taxes.

Savings bond interest may or may not be taxable depending on the issue and what you use the bond interest for. For example, the interest on certain Series EE and Series I bonds is nontaxable if it is used for qualified education expenses.

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