When it comes to investments there are four types from a tax standpoint:
1.  Taxable Investments
2.  Tax-Free Investments
3.  Tax Advantaged Investments and
4.  Tax Deferred Investments

The purpose of this article is to provide an overview of the types of investments that are the most tax efficient.

FEDERAL AND STATE TAX-FREE INVESTMENTS
1.   Municipal Bonds - Exempt from state tax of the state in which the obligations are issued
2.   Municipal Bond Funds - Exempt from state tax of the state in which the obligations are issued
3.   Municipal Bond Trusts - Exempt from state tax of the state in which the obligations are issued
4.   Cash Surrender Value Loans
5.   Roth IRA
6.   Roth 401(k)
7.   529 Plan distributions used for qualified higher education expenses, including room and board
8.   Series I or EE Bonds - Earnings exempt if used for qualified higher education expenses
9.   Coverdell IRA (aka Education IRA) - Earnings exempt if used for qualified education expenses (tuition: elementary school, high
       school, tutoring and college)
10.  Earnings on investments held in Health Savings Arrangements used to pay for eligible medical expenses

STATE TAX-FREE INVESTMENTS
1.  Treasury Bills 
2.  Treasury Notes
3.  Treasury Bonds
4.  Sallie Mae Mortgage Backed Securities
5.  EE Bonds
6.  I Bonds

TAX ADVANTAGED INVESTMENTS
1.    Real Estate Investments
2.    Rental Properties
3.    Principal Residence - Up to $500,000 ($250,000 if single) of gain excluded
4.    Single Premium Life Insurance Products
5.    Traditional IRAs
6,    Stocks held more than one year
7.    Exchange Traded Funds held more than one year
8.    Mutual Funds held more than one year
9.    Vacation Homes
10.  Precious Metals/Collectibles/Coins - 28% maximum long-term capital gains tax rate 
11.  Real Estate Investment Trusts
12.  Qualified Small Business Stock - 50% gain exclusion. Balance subject to 15% long-term capital gains tax

TAX DEFERRED INVESTMENTS
1.   I Bonds
2.   Fixed Annuities
3.   Variable Annuities
4.   EE Bonds
5.   Traditional IRAs
6.   401(k) Plans
7.   403(b) Plans
8.   457 Plans
9.   Qualified Small Business Stock - Proceeds used to purchase new Qualified Small Business Stock
10. 529 Plan Investment earnings are deferred until used for qualified higher education expenses.

I wish to thank the 22 year old Congressional staff members who write the tax code and regulations, the IRS for their incomprehensible explanations thereof and the tax court rulings for making the U.S. income tax system as complex as it is, thus affording me and many other CPAs the opportunity to make a living in a completely unnecessary field.