Fortunately, no. The amount of the benefits includible in gross income may be zero, somewhere between zero and 50%, or somewhere between 50% and 85%; 85% is the maximum taxable percentage. The exact amount depends on the amount of your net benefits, your tax-free interest from municipal bonds, and your overall income.
The difference between face value of a bond and lower market price, attributable to rising interest rates. On a sale, gain on the bond is generally taxed as ordinary income to the extent of the discount.