Tax-Free Interest Impacts the Taxation of Social Security and Medicare Premiums.
While interest from municipal bonds may be "tax-free" on a federal tax basis, it can impact the taxation of other income sources such as Social Security. The IRS includes income from tax-exempt sources in its calculation of Modified Adjusted Gross Income (MAGI) when calculating the Provisional Income which is used to determine how much of a Social Security benefit is taxable. In addition to its impact on Social Security, federally tax-exempt interest can impact Medicare Part B and Part D premiums paid by the client.
You can find "tax-free interest" within the "other income" section of Tax Clarity.