The U.S. federal government provides its own bonds from the treasury and from a number of government agencies. Those maturing in less than one year are called T-bills. Bonds that grow in one to ten years are T-notes, and those that take more than ten years to mature are treasury bonds. In many cases, you don't need to pay state or local income taxes on the interest they make.

Munis financing things like hospitals, schools, power plants, streets, workplace structures, airports, bridges and so forth. Towns typically issue bonds when they need more money than they collect through taxes. The great thing about municipal bonds is that you do not need to pay federal income taxes on the interest they earn.

While business bonds are a higher risk than government bonds, they can earn a lot more money. There's likewise a much larger selection of business bonds. The drawback is that you do have to pay federal earnings tax on the interest they

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