However, if you do withdraw part of the capital before the time is up you will have to pay tax on the interest.

It is special because you do not pay any tax on the interest you get.

Investors increasingly choose these securities because they do not have to pay taxes on the interest they receive.

The other plan would allow parents to invest in mutual funds without having to pay taxes on the yearly interest.

Put another way, if you invest $500,000 in the bank, you have to pay taxes on the interest you earn.

This loan allows you to pay only on the interest during the two year introductory period at a lower set rate.

Now, bank clients who live in the European Union pay a withholding tax on the interest made by certain investments.

But if you bank that $100,000 and use the interest to pay rent, you have to pay income tax on the interest.

The other plan would allow parents, through the state, to invest in mutual funds to save for college without having to pay taxes on the interest.

Purchasers of the tax-exempt bonds do not have to pay Federal income tax on the interest received from the state or locality.