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Simple English definitions for legal terms
tax-free
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A quick definition of tax-free:
Tax-free means that something is not subject to taxation by law. This can refer to a charity or other organization that is exempt from paying taxes, or to an investment such as municipal bonds that does not require the investor to pay income tax on the interest earned. Essentially, tax-free means that no taxes need to be paid on a particular item or income.
A more thorough explanation:
TAX-FREE
Tax-free means that something is not subject to taxation by law. It can also refer to interest earned on investments that is not subject to income tax.
- A tax-exempt charity is an organization that is not required to pay taxes on the money it receives from donations.
- Tax-exempt municipal bonds are investments that pay interest that is not subject to income tax.
These examples illustrate that tax-free means that something is exempt from taxation. In the case of a tax-exempt charity, it means that the organization does not have to pay taxes on the money it receives. In the case of tax-exempt municipal bonds, it means that the interest earned on the investment is not subject to income tax.