Bonds explained
A bond is a loan to a government or company: it pays interest and returns your money at maturity, unless the issuer defaults. If you sell before maturity, the price depends on interest rates at the time (Investor.gov).
Main types and how they're taxed
- Treasuries – federal tax, no state or local tax.
- Municipal bonds – often no federal tax; usually no state tax on your own state's bonds.
- Agency bonds – some are state-tax exempt, some are not.
- Corporate bonds – taxed federally and by your state; higher yields, more credit risk.
Yield and risk
A higher yield usually means more risk of default or a longer wait. IncomeGrid shows a risk level 1–5 next to each yield. IncomeGrid ranks every item by yield after tax for where you live: federal, state and each investment type (Treasuries, municipal bonds, corporate bonds, funds, REITs and filed offerings are each taxed differently).
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IncomeGrid has 40,000+ investment options screened, including Treasury, agency, municipal and company bonds.
Sources
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