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===Taxability=== In the United States, although not all municipal bonds are tax-exempt, most are.<ref>{{cite web |title=Investor Bulletin: Municipal Bonds β An Overview. February 1, 2018 |url=https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_munibondsoverview |publisher=U.S. Securities and Exchange Commission |access-date=4 July 2021}}</ref> Tax-exempt securities represented about 80% of trading volume in U.S. municipal bonds in 2020.<ref>{{cite web |title=Fact Book (Municipal Market Trade Summary: p.7) |url=https://www.msrb.org/Market-Topics/~/media/D04497574A17492489ECF7F7430A7B71.ashx? |website=Electronic Municipal Market Access |publisher=Municipal Securities Rulemaking Board |access-date=4 July 2021}}</ref> Interest income from most municipal bonds is excludable from gross income for federal income tax purposes, and may be exempt from state income tax as well, depending on the applicable state laws.<ref>{{cite book |last1=Feldstein, Sylvan and Fabozzi, Frank J. |title=The Handbook of Fixed Income Securities |date=1997 |publisher=McGraw-Hill |location=New York |isbn=0-7863-1095-2 |page=161 |edition=Fifth}}</ref> Internal Revenue Code section 103(a) is the statutory provision that excludes interest on municipal bonds from federal income tax.<ref>[[Internal Revenue Code|IRC]] 103(a).</ref> {{As of|2004}}, other rules, however, such as those pertaining to private activity bonds, are found in sections 141β150, 1394, 1400, 7871. The state and local exemption was the subject of litigation in ''[[Department of Revenue of Kentucky v. Davis]]''.<ref>{{Cite news|url=https://www.nytimes.com/2008/05/20/business/20bizcourt.html|title=Court Upholds Tax Exemptions for Municipal Bonds|last=Greenhouse|first=Linda|date=2008-05-20|work=The New York Times|access-date=2017-10-07|language=en-US|issn=0362-4331}}</ref> Bonds issued for certain purposes are subject to the alternative minimum tax as an item of tax preference.<ref>{{cite book |title=Feldstein and Fabozzi op cit |page=182}}</ref><ref name="MSRB Education Center"/>
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