How are bonds taxed?

Bonds generate income which may be taxable. Interest on corporate bonds is taxable, but some government bonds may be exempt from certain taxes. For example, Treasurys are free from state and local taxes, but you will owe federal taxes. Munis, on the other hand, are federal-tax free and may be exempt from state and local taxes if you live in the state that issued them. You can also make your portfolio more tax efficient by taking advantage of certain retirement accounts. For details and tax-saving strategies, see Investing and taxesTo top of page