What is a Tax-Exempt Bond?

Tax-exempt bonds are bonds that are not subject to income tax by the government. The laws of most western countries require that the income of securities must be included in the total investor income and pay income tax. However, in order to attract investors to invest in public utilities or certain special undertakings recognized by the government, some governments have stipulated that interest income derived from the purchase and development of such undertakings is exempt from income tax. In the United States, municipal bonds issued by some municipalities for the construction of schools, hospitals, bridges, roads, ports, and dam streets are mostly exempt from local income tax. In many countries, in order to encourage investors to subscribe for government bonds, interest income on the purchase of government bonds can be reduced or exempted from income tax. Japan has implemented a "small tax non-taxable system" since 1968; government bonds and key construction bonds issued by the Chinese government also provide for tax exemption. ^[1]

Tax-exempt bonds

Right!

Tax-exempt bonds are bonds that are not subject to income tax by the government. The laws of most western countries require that the income of securities must be included in the total investor income and pay income tax. However, in order to attract investors to invest in public utilities or certain special undertakings recognized by the government, some governments have stipulated that interest income derived from the purchase and development of such undertakings is exempt from income tax. In the United States, municipal bonds issued by some municipalities for the construction of schools, hospitals, bridges, roads, ports, and dam streets are mostly exempt from local income tax. In many countries, in order to encourage investors to subscribe for government bonds, interest income on the purchase of government bonds can be reduced or exempted from income tax. Japan has implemented a "small tax non-taxable system" since 1968; government bonds and key construction bonds issued by the Chinese government also provide for tax exemption. ^[1]

Chinese name

Tax-exempt bonds

Refers to bonds that are not subject to interest income tax by government charter. The laws of most western countries stipulate that the income of securities must be included in the total investor income and pay income tax. However, in order to attract investors to invest in public utilities or certain special undertakings recognized by the government, some governments have made special rules: bonds purchased for the development of such undertakings are exempt from income tax, and many countries have encouraged investors to subscribe. Treasury bonds stipulate that those who invest in treasury bonds may pay less or exempt income tax. Japan has implemented a "small tax non-taxable system" since 1968. Treasury bills and key construction bonds issued by the Chinese government also provide tax exemption.

Classification of tax-exempt bonds

There are three types of tax-exempt bonds: long-term (more than 20 years), medium-term and short-term (less than six months), and sometimes money market fund bonds consisting of tax-free bonds can be purchased.