Money Market Mutual Funds, Repurchase Agreements, and State/Local Tax Exemptions
JULY 13, 2023 BY JONATHAN PING 3 COMMENTS
In particular, even though the Vanguard Treasury Money Market Fund has “Treasury” in its name, it doesn’t only hold Treasury Bonds. It can also hold something called repurchase agreements (“repos”). These are often sold on a very short-term basis (overnight or less than 48 hours). While a repo is considered a very, very safe loan backed by government securities, it is not itself a government security, which means the income it creates is taxable at the state and income level.
