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D.C. Muni Investors Granted One-year Reprieve

Home > News and Perspectives > D.C. Muni Investors Granted One-year Reprieve

<h3>Staff Editor</h3>

Staff Editor

Municipal bond investors in Washington, D.C. were granted a one-year reprieve from a tax on out-of-state bonds.

During debate on its budget last month, the D.C. Council voted to eliminate the income- tax exemption on interest earned from muni bonds issued outside of the District. In addition, the Council decreed that this new tax provision would take effect retroactively to January 1, 2011.

Last week, D.C. municipal bond investors were afforded a one-year reprieve. Councilwoman Mary Cheh, who introduced this “about face,” argued that taxing bondholders from January 1, 2011, was unfair because investors purchased the bonds believing the interest earned would be fully tax exempt.

The 8.5% tax on out-of-state bonds will now take effect on January 1, 2012.

Jul 18, 2011

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