How to Purchase Tax-Free Municipal Bonds in All 50 States

If you own a municipal bond, the issuer is in debt to you. When you buy a municipal bond, also called a muni, you lend money to the issuing government, which -- in turn -- promises to pay you interest. State and local governments use municipal bonds in the same way that the federal government uses savings bonds: to fund government projects. Municipal bonds represent a tax-free investment, which is typically at least $5,000. More than 8,000 municipalities issue munis as of the date of publication, making it possible in theory for you to own munis from all 50 states.

Step 1

Establish an account with a brokerage licensed to buy and sell bonds from all 50 states. Compare commission prices or transaction fees and select a brokerage that best suits your needs.

Step 2

Compare each muni bond’s coupon, maturity date, rating, price, amount and yield.

Step 3

Deposit money into your brokerage account. Depending on the firm, you typically can deposit money by electronic funds transfer from a bank account, wire transfer or a check by mail.

Step 4

Let the brokerage know that you’d like to buy a certain muni bond. Your broker will let you know how to buy the bonds or buy the bond for you, depending on the municipalities' policies.

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