tax-exempt financing

Tax-exempt financing refers to the issuance of government or municipal bonds to raise funds for projects like schools, roads, or hospitals. These bonds are attractive to investors because the interest income they generate is exempt from federal income tax, and sometimes state and local taxes as well. This tax advantage allows issuers to borrow at lower interest rates, making projects more affordable and sustainable. Essentially, tax-exempt financing helps public entities fund essential infrastructure without significantly increasing costs for taxpayers or burdening their budgets.