Tax-deductible interest offers individuals and companies that pay interest on eligible debt facilities (such as mortgage payments or certain types of corporate debt) deductions or offsets against tax. In other words, they attract tax relief These deductions reduce taxable income (tax base) hence lower tax payments. On the other side of the coin i.e. for investors, interest on US municipal bonds is paid tax-free. Likewise, interest on Eurobonds is withholding tax-free for investors residing outside of the issuer’s home base.