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© 2023 SEI 2 Categories of bonds There are many types of bonds, including those whose interest payments are generally exempt from federal income tax income tax exempt. Some of the most common types of bonds include: Treasury These are direct U.S. government obligations, which are used to finance the budget. Municipal These bonds are issued by a state, municipality, or county to finance projects or operations. Municipal bonds are generally federal tax exempt. They may also be exempt from state and local taxes if you live in the state in which the bond is issued. As shown in the above chart, municipal bonds run from high-quality (i.e. investment grade) to junk (i.e. high-yield). Corporate These are issued by public and private companies. They typically are taxable, have a term maturity and are traded on an exchange. Corporate bonds are also rated by their quality (e.g. likelihood of repayment). Information provided by SEI Investments Management Corporation (SIMC). This information is for educational purposes only and should not be relied upon by the reader as research or investment advice. Investing involves risk, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. There is no guarantee that the income from municipal bonds will be exempt from federal or state income taxes. Capital gains on municipal bonds, if any, are subject to capital gains tax. Income from municipal bonds may be subject to the alternative minimum tax. Diversification may not protect against market risk. Neither SIMC nor its affiliates provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.