Which bond types are taxable? At what levels are they taxable (federal, state, local)?

Answer 1

If you buy any bond and then sell it for more than you paid for it, the gain on the sale is going to be taxed at the federal and state levels. Local taxing bodies may or may not tax capital gains.

The interest income on a bond is taxable at the federal and state levels as interest income, unless it is specifically exempted. Local laws vary, some localities tax interest income, some do not.

Exemptions:

Interest on bonds issued by the federal government are by law exempt from state taxes.

Interest on bonds issued by a state government, or a local government, are by law exempt from federal taxes.

Interest on certain federal bonds are exempt from taxes when the proceeds are used for higher education.

Some states issue bonds that are also exempt from state taxes. This is not a legal exemption, but it does occur.

Answer 2

Corporate Bonds - Taxable (Federal and State)
Municipal Bonds - Exempt Federal and possibly exempt state
US Bonds - Taxable (Federal), Exempt (State)