Planning & Education | What Taxes Apply To Fund Distributions?

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The Basics |

What Taxes Apply To Fund Distributions?

You are subject to taxes on income and capital gain distributions regardless of whether you receive them in cash or reinvest them in additional shares. All income and capital gain distributions made to meet year-end tax obligations of the fund are subject to federal income taxes (and state and local taxes as well).

Exceptions:

U.S. Treasury Securities interest income is generally exempt from state and local income taxes.

Municipal Bond Fund dividend income is exempt from federal income tax and may be exempt from state and local taxes as well if the investor lives in the issuing state.

Note that income from some municipal bonds may be subject to the alternative minimum tax.

Income may be subject to state and local taxes for out-of-state residents. Some income may be subject to the federal alternative minimum tax for certain investors. Capital gains paid, if any, are taxable.

Next: Which Funds Can Generate Taxable Distributions?

This information is general in nature and is not intended to constitute tax advice. Always consult your tax advisor for more detailed information on tax issues and advice on your specific situation.

Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus that contains this and other information about a fund, and read it carefully before investing.