What Is The Difference Between Tax-Free And Saving Bonds?
Tax-free bonds are bonds issued by municipalities or government entities and are exempt from federal income tax. On the other hand, Saving bonds are issued by the federal government designed to help individuals save money. While both types of bonds offer the potential for a return on investment, tax-free bonds provide other tax savings than holding bonds. What are saving bonds? When it comes to savings bonds, there are two main types: tax-free and saving bonds. Tax-free bonds are typically issued by state and local governments while holding bonds are issued by the federal government. Tax-free bonds are exempt from federal, state, and local taxes. This makes them an attractive option for investors looking to minimize their tax liability. However, tax-free bonds typically have lower interest rates than saving bonds. On the other hand, Saving bonds are subject to federal taxes but not state or local taxes. The interest rates on saving bonds are typically higher than tax-free bonds, makin...