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Triple tax free ny muni bonds are federal,state and city tax…

triple tax free ny muni...
triple tax free ny muni bonds are federal,state and city tax free. is this correct. if a ny resident moves to ct, do they only pay state tax on the ny muni or all three.
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Answered in 11 minutes by:
10/1/2017
Chad EA, CFP ®
Chad EA, CFP ®, Enrolled Agent
Category: Tax
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Hello my name is***** ® professional.

Generally, interest income from municipal bonds are tax free from federal and state taxes. Capital gains are usually not tax-exempt. Capital gains realized from selling a bond are subject to federal and state taxes.

Often NY municipal bonds are referred to as triple tax free when the bond is intended to not be taxable at a federal, state or by NYC.

However, interest income from municipal bonds issued by another state other than your home state, may be taxable by your home state.

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Here is a link with the description of invesment objects of T Rowe Prices's triple tax free municipal bond fund. ticker PRNYX

https://www3.troweprice.com/fb2/fbkweb/objective.do?ticker=PRNYX

"The fund's investment objective is to provide, consistent with prudent portfolio management, the highest level of income exempt from federal, New York state, and New York city income taxes by investing primarily in investment-grade New York municipal bonds."

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Customer reply replied 4 months ago
you said Generally, interest income from municipal bonds are tax free from federal and state taxes, does this mean as long as you live in the state where the bond was purchased., the state tax is free but all munis are federal free across the board.

Not all municipal bonds are tax free. If a bond is issued but doesn't directly benefit the public such as a private issue municipal bond, then that type of bond may not be tax deductible.

The majority of bonds are tax free federally and by the state you live in, but not all. You really have to drill down and know what the bond was issued for. An example of a bond that is almost always tax free both federally and by the state is a bond that is issued to support water infrastructure.

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If you own a triple tax free bond issued by NYS and you home state is CT, then you most likely will not have to pay federal tax, but will have to pay state tax on interest from the muni's

Chad EA, CFP ®
Chad EA, CFP ®, Enrolled Agent
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Thank you for the rating.

Have a good evening and please let me know if you have any further questions.

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Chad EA, CFP ®
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