Bonds produce earnings which might be taxable. Interest on corporate bonds is taxable, but some government bonds might be exempt from particular taxes. For instance, Treasurys are totally free from state and nearby taxes, but you'll owe federal taxes. Munis, around the other hand, are federal-tax totally free and might be exempt from state and nearby taxes in the event you reside within the state that issued them. You may also make your portfolio much more tax effective by taking benefit of particular retirement accounts. For particulars and tax-saving methods, see Investing and taxes.