While a fund may qualify as a tax-exempt mutual fund and be eligible to pass through its tax-exempt income to its
shareholders, the fund may also generate some taxable income. This taxable income may include distributions of
ordinary income such as from market discount, short-term capital gains, and/or long-term capital gains, all of which
would be subject to the same type of tax treatment discussed on previous pages; however, such distributions
generally will not be treated as qualified dividend income subject to reduced rates of taxation.
Dividends that are exempt from federal income tax may or may not be exempt under the laws of a particular state or
local authority. Generally, however, income from bonds issued by municipalities in a particular state is not taxable
in that state. However, some states permit pass-through of tax-exempt income only if a fund meets certain threshold
requirements with respect to the percentage of its assets invested in or exempt-interest dividends derived from
tax-exempt obligations of the state. We recommend that you consult your tax advisor regarding laws in your state.
Exempt-interest dividends paid by a mutual fund (reported on your year-end fund statement and in box 11
(Exempt-interest income) of your 1099-DIV should be reported on line 2a (Tax-exempt interest) of Form 1040 and are
taken into account when determining the taxable portion of Social Security or railroad retirement benefits.
A percentage of the income paid to shareholders in many Delaware Funds by Macquarie® tax-free
funds may be subject to the federal alternative minimum tax (AMT) that applies to some investors. Please see the
applicable Fund's prospectus for more information. Your tax advisor can provide more information on the AMT and
determine whether this tax applies to you.
Interest on debt incurred by a shareholder to acquire, or to carry, an investment in a tax-exempt mutual fund
generally will be nondeductible for federal income tax purposes. There is also a special rule that if a shareholder
has held shares in a tax-exempt fund for six months or less and sustains a loss on the sale or redemption of the
shares, the loss will be disallowed to the extent of the amount of the tax-exempt dividends received. However, this
rule generally will not apply for losses incurred on shares of a tax-exempt fund that declares exempt interest
dividends daily in an amount equal to at least 90% of its net tax-exempt interest and distributes them at least
monthly and for which the taxpayer’s holding period began after December 22, 2010.
In certain circumstances, interest on a tax-exempt security, as well as fund distributions derived from the
interest, could become taxable. In such a case, the fund may be required to send you an amended Form 1099 in order
to report additional taxable income that could require you to file amended federal, state, and local income tax
returns for such prior year to report and pay tax and interest on your pro rata share of the additional amount of
taxable income.
AMT exemption amounts for 2023
For 2023, individual alternative minimum tax exemption amounts are as follows:
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$81,300 for unmarried taxpayers and head of household (not surviving spouse)
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$126,500 for joint filers and surviving spouse
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$63,250 for married filing separately