What are those tax-free funds?

I am wondering, are those State tax-free funds are tax free for the earnings?
So, if I have a Maryland tax free funds and I make 5% interest on it. I don't need to pay that interest gain as part of my income tax, am I correct?

You are correct, it is free of federal and state taxes (as long as you live in Maryland). They may also be free of local taxes if any cities in Md. also have income taxes. You may have to pay capital gains taxes on the profits the fund makes when they buy and sell.

Correct. But you may have to pay state income tax on it.

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