Tax Exempt

Tax exempt means the income is not subject to tax.

Maria who is in the 20% tax bracket earned $100 interest on her bank account and $1000 interest on tax exempt municipal bonds. Her tax bill is $20 (.20 x100). She does not have to pay tax on the interest she earns on tax exempt bonds.

https://accounting.uworld.com/cpa-review/lc/accounting-dictionary/term/tax-exempt/