As you choose a type of investment to make, your options will fall in either the taxable or tax-free bucket. With taxable investments, any income is subject to federal and state taxes. An exception would be US obligations, like Treasury Bonds, whose income is tax exempt at the state level. With tax-free investments, like municipal obligations, the income is exempt from federal tax and is exempt from state tax if the obligations are from that state. When deciding whether it is more advantageous to invest in taxable or tax-free investments, there are a number of items to consider, of which I’ll touch on a few.