What is Municipal Bond?

Municipal bond it’s also known as muni. These bonds are issued by governments or states and it’s main purpose is to fund government activities or other special projects. The main advantage of buying municipal bonds is that the person who buys it will be spared from federal income tax. Though if the person in question makes a profit from selling these bonds then he has to pay taxes. The municipal bond became popular amongst those citizens who have high tax brackets. By purchasing these bonds they will be paying less taxes. The muni’s pay less interest then similar corporate bonds but for the tax benefits people are still buying them up. The money gained by issuing the bonds is used by the government to build bridges, highways, dorms, or even low income houses.