What is the meaning of Municipal Bond?

Bonds issued by any of the 50 states, the territories and their subdivisions, counties, cities, towns, villages and school districts, agencies, such as authorities and special districts created by the states, and certain federally sponsored agencies such as local housing authorities. Historically, the interest paid on theses bonds has been exempt from federal income taxes and is generally exempt from state and local taxes in the state of issuance. There are approximately $1. 3 trillion' Municipal Bond's outstanding and they generate about $50 billion tax-free interest income each year.