Municipal bonds, also known as "munis," are debt securities issued by state and local governments or their agencies to finance public projects such as schools, hospitals, and infrastructure. These bonds are a popular investment option for those seeking tax-free income, as the interest earned from municipal bonds is generally exempt from federal income taxes and in some cases, state and local taxes as well. Municipal bonds come in various forms, including general obligation bonds and revenue bonds. General obligation bonds are backed by the full faith and credit of the issuer, meaning that the government entity issuing the bond has pledged to use all available resources, including tax revenues, to repay the bondholders. Revenue bonds, on the other hand, are backed by specific revenue streams, such as tolls or fees from a particular project or facility.

Taxable municipal bonds, including Build America Bonds (BABs), are a type of municipal bond that are subject to federal income tax. Unlike traditional tax-exempt municipal bonds, the interest earned on taxable municipal bonds is taxable at the federal level, although it may still be exempt from state and local taxes. One advantage of taxable municipal bonds is that they generally offer higher yields than tax-exempt municipal bonds, making them an attractive option for investors seeking higher returns or to utilize in a tax deferred account such as an IRA. This is because issuers of taxable municipal bonds may be able to offer higher interest rates than tax-exempt bonds due to the broader investor base for taxable bonds.

On 8/16/2022 President Biden signed the Inflation Reduction Act into law which encompassed a wide range of topics that arise during client conversations. We plan to touch briefly on various aspects of this large fiscal package because these changes will impact clients directly and indirectly. One such example of a direct financial impact are the tax credits on electric vehicles (EVs). There are several Indirect impacts to portfolios via new tax policies on corporations. Today we discuss the 1% surcharge on corporate buy backs.

Welcome to the midway point of the year. As we are heading into the final months of the year, checking in on tax-saving strategies is always a good idea. Below is a list of some of our most frequently asked limits for Contribution Accounts.

Health Savings Accounts (HSAs) were introduced in 2003 with the passing of the Medicare Prescription Drug, Improvement, and Modernization Act. HSAs are intended to give Americans more control over their health care and provide access to coverage that is more affordable, flexible, and portable. HSAs must be used in conjunction with High Deductible Health Plans offered by many insurance companies. HSAs have a triple tax advantage in that: