Investors seeking the maximum tax benefit on their municipal bond income should move to Puerto Rico, because the commonwealth levies the highest personal and corporate income tax rates in the nation and exempt all state and local government bonds from those taxes, according to a Bond Buyer survey of state income taxes.

The survey found that 45 states, the District of Columbia, and Puerto Rico exempt all municipal bonds issued within the state from their personal and corporate income taxes. Thus residents of states with high income tax rates will find investments in local bonds or single-state municipal bond funds more attractive than residents living in states without income taxes.

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