Municipal bonds, often referred to as 'munis', are fixed-income securities that state and local governments issue to raise money for public projects, such as building schools, highways, and hospitals. Investors in municipal bonds receive periodic interest payments, typically exempt from federal income taxes, and in some cases, state and local taxes, making them attractive for those in higher tax brackets. There are two primary types of municipal bonds: general obligation bonds, which are backed by the full faith and credit of the issuing body, and revenue bonds, which are secured by specific revenue sources, like tolls or taxes.