Tax rate on corporate bond interest
The current yield is the annual return on the dollar amount paid for a bond, regardless of its maturity. If you buy a bond at par, the current yield equals its stated interest rate Thus, the current yield on a par value bond paying 2 00% is 2 00%. Municipal bonds sometimes are known as munis and are tax-free at the federal level. If you buy them in the state where you live, they can be free of state and local taxes as well. These are sometimes called “triple free" for that reason. Corporate bonds have no tax-free provisions. You will pay taxes on any earnings from these debt securities.