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Do fixed-income securities pay tax-exempt income?

April 26, 2017fixed-income income pay securities tax-exempt

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Do fixed-income securities pay tax-exempt income?

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Interest on U.S. Treasury securities is exempt from federal income tax. In addition, municipal securities pay interest that’s exempt from federal income tax as well as state income tax, if you reside in the state of issuance. These securities may also be exempt from local income taxes in some municipalities. However, income may be subject to the Alternative Minimum Tax (AMT) for investors in high tax brackets.