TAX-EXEMPT BOND – Another term for a municipal bond, other than taxable municipal bonds. Interest on most municipal securities is excluded from gross income for federal income tax purposes and may or may not be exempt from state income or personal property taxation in the jurisdiction where issued or in other jurisdictions. If the bond is exempt from state income tax, it possesses “double exemption” status. “Triple exemption” bonds are exempt from municipal, local income or other special taxes, as well as from federal and state income tax. Compare: TAXABLE MUNICIPAL SECURITY.