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 10
(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.
For 2019, 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 Dec. 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 2019
For 2019, individual alternative minimum tax exemption amounts are as follows:
$71,700 for unmarried taxpayers and head of household (not surviving spouse)
$111,700 for joint filers and surviving spouse
$55,850 for married filing separately