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Tax Strategies: Combating Taxes

Combating Taxes May Help Boost Your Bottom Line

Taxes can potentially take a big bite out of your income and erode your purchasing power. The good news is that you may be able to combat taxes by investing in funds free from federal, and in some cases, state taxes.

Seek Income and Fight Taxes with Actively-Managed Investments

Keeping more of what you earn is a no-nonsense financial strategy that’s aimed directly at your bottom line. One of the best ways to accomplish this is by more effectively managing your tax burden. American Century Investments® can help with municipal bond funds that seek to generate tax-free income and capital appreciation. Learn more about how our funds can be part of a four-step plan to developing a smart tax solution for your portfolio.

Understand the Impact of Taxes on Your Income

Regardless of how much you earn, taxes have the potential to take a big bite out of your purchasing power. And, with budget shortfalls plaguing all levels of government, potential policy changes could leave you with an even larger tax burden.

Consider the Benefits of Municipal Bonds

Municipal bonds offer the unique benefit of generating income that's free from federal taxes and, in some cases, free from state and local taxes. In addition, municipal bonds may help diversify a stock-heavy portfolio and have a history of lower volatility compared to stocks.*

Navigate the Municipal Bond Market with Mutual Funds

The Credit Crisis a few years back highlighted the need for credit worthiness in investments. It's still critical today and also why we believe the insights and expertise offered in professionally-managed investments are also important.

Choose a Leader for Smart Tax Solutions

American Century Investments has been managing bond funds since 1972 and has developed a rigorous approach to managing tax-free bond portfolios. Spanning maturities and risk levels, our municipal bond funds can be part of a tax-smart solution for you.

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Based on a comparison of the annualized standard deviation of gross returns between the S&P 500® and the Bloomberg Barclays Municipal Bond Index for the 10-year period ended 12/31/2020. Standard deviation is a measure of volatility. Source: Bloomberg Index Services Ltd, January 2021.

IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

Generally, as interest rates rise, the value of the bonds held in the fund will decline. The opposite is true when interest rates decline.

Investment income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax (AMT). Capital gains are not exempt from state and federal income tax.

Because the fund invests primarily in California municipal securities and securities issued by U.S. territories, its yield and share price will be affected by political and economic developments within the state and territories.

©2024 Standard & Poor's Financial Services LLC. All rights reserved. For intended recipient only. No further distribution and/or reproduction permitted. Standard & Poor's Financial Services LLC ("S&P") does not guarantee the accuracy, adequacy, completeness or availability of any data or information contained herein and is not responsible for any errors or omissions or for the results obtained from the use of such data or information. S&P GIVES NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE IN CONNECTION TO THE DATA OR INFORMATION INCLUDED HEREIN. In no event shall S&P be liable for any direct, indirect, special or consequential damages in connection with recipient's use of such data or information.

Source: Bloomberg Index Services Ltd