From Yahoo Finance: 2025-03-20 12:08:00

Exempt-interest dividends from municipal bond funds may be impacted by the alternative minimum tax (AMT), especially those derived from private activity bonds funding projects like sports stadiums. Investors subject to AMT should review fund tax disclosures to understand potential implications on their tax liability. Seeking financial advice can help navigate tax-efficient investment decisions.

While exempt-interest dividends are tax-free at the federal level, some may still be subject to AMT if derived from private activity bonds. Investors should be aware of the portion of dividends subject to AMT, as disclosed by fund tax reports. Understanding how AMT adjustments affect tax liability can inform investment decisions and overall tax efficiency.

Investors receiving exempt-interest dividends from municipal bond funds should be aware of potential AMT implications, particularly for those from private activity bonds. Reviewing fund disclosures on income sources and understanding AMT calculations can help assess the impact on tax liability. Seek professional advice to navigate tax-efficient investment strategies.

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Read more at Yahoo Finance: Are Exempt-Interest Dividends Subject to AMT?