Tax Anticipation Note - TAN

AAA

DEFINITION of 'Tax Anticipation Note - TAN'

A short-term debt security issued by a state or local government to finance an immediate project that will be repaid with future tax collections. State and local governments use tax anticipation notes to borrow money, typically for one year or less and at a low interest rate, in order to finance a capital expenditure such as the construction of a road or school. The government then uses the following year's tax revenue to repay the TANs.

INVESTOPEDIA EXPLAINS 'Tax Anticipation Note - TAN'

Tax anticipation note financing helps governments smooth out the ups and downs in their revenue cycles, if the timing of their receipts does not match the timing of their expenditures. TANs are one of several types of anticipation note that state and local governments can use; others include revenue anticipation notes, tax and revenue anticipation notes and bond anticipation notes. Tax anticipation notes are a type of municipal bond, so the interest earned from TANs is generally tax exempt for investors.

RELATED TERMS
  1. Anticipation Note

    A short-term obligation that is issued for temporary financing ...
  2. Bridge Loan

    A short-term loan that is used until a person or company secures ...
  3. Construction Loan Note - CLN

    A short-term obligation in the form of a note, used for the funding ...
  4. Revenue Anticipation Note - RAN

    A municipal bond that is repaid with expected revenues from the ...
  5. Demand Note

    A loan with no fixed term or set duration of repayment. It can ...
  6. Bond Anticipation Note - BAN

    A short-term interest-bearing security issued in advance of a ...
Related Articles
  1. Bonds & Fixed Income

    The Basics Of Municipal Bonds

    Investing in these bonds may offer a tax-free income stream but they are not without risks.
  2. Taxes

    Weighing The Tax Benefits Of Municipal Securities

    Find out how to determine whether the tax exemption offered by "munis" benefits you.
  3. Economics

    Why is Keynesian economics sometimes called demand-side economics?

    Learn why Keynesian economics is sometimes called demand-side economics, and find out how government spending increases aggregate demand and encourages growth.
  4. Bonds & Fixed Income

    How does preferred stock differ from company issued bonds?

    Discover the primary differences between preferred stock and corporate bonds, two income-generating investment vehicles issued by certain companies.
  5. Economics

    How successful is fiscal policy in guiding the national economy?

    See why it is difficult to evaluate the impact of fiscal policy on the national economy and how fiscal tools have failed to live up to expectations.
  6. Mutual Funds & ETFs

    How much of my total assets should I be keeping in my money market account?

    Investing a portion of total assets in a cash position such as a money market account provides investors access to funds in the case of an emergency.
  7. Economics

    What do Keynes and Freidman have to do with fiscal and monetary policy?

    Find out how John Maynard Keynes and Milton Friedman influenced how modern economists and analysts think about fiscal and monetary policy.
  8. Economics

    What is the role of deficit spending in fiscal policy?

    Read about the role deficit spending can play in a government's fiscal policy, and learn why economists are torn about the efficacy of debt-related stimulus.
  9. Economics

    How do debt issues affect governments' abilities to run fiscal deficits?

    Read about whether or not debt issues affect the federal government's ability to run fiscal deficits, and find out what those impacts are.
  10. Bonds & Fixed Income

    What is the difference between yield to maturity and the yield to call?

    Determining various the various yields that callable bonds can provide investors is an important factor in the bond purchasing process.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center