Municipal Bonds

Municipal bonds mean debt issued by state, city, or local governments. In simple terms, municipal bonds are loans investors make to local governments. Municipal bonds are important because they help fund public projects such as schools, roads, bridges, and utilities. In the United States, some municipal bond interest may have tax advantages for investors. For example, a city may issue municipal bonds to raise money for a new subway line or public hospital. Municipal bonds are not the same as Treasury bonds. Municipal bonds are issued by local governments, while Treasury bonds are issued by the U.S. federal government.