The $2.5 trillion municipal bond market skirted a land mine Monday when the Supreme Court ruled that states could continue to give special tax breaks on the bonds that fund hospitals, roads, schools and other services.
The justices ruled 7-2 in a case from Kentucky that states can exempt interest on their own bonds from taxation while taxing residents for interest on bonds issued by other states.
In the municipal bond market, 41 states have systems similar to Kentucky's. Seven states do not impose taxes on personal income: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Indiana has a tax exemption for interest on municipal bonds from …
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