Page 73 - Interest Income - Individuals Handbook

State or Local Government Obligations

State or Local

 Interest on a bond used to finance government operations generally
isn't taxable if the bond is issued by a state, the District of Columbia,
a possession of the United States, or any of their political
subdivisions.
 Bonds issued after 1982 (including tribal economic development
bonds issued after February 17, 2009) by an Indian tribal government
are treated as issued by a state.
 Interest on these bonds is generally tax exempt if the bonds are part
of an issue of which substantially all proceeds are to be used in the
exercise of any essential government function.

State or Local

 For information on federally guaranteed bonds, mortgage revenue
bonds, arbitrage bonds, private activity bonds, qualified tax credit
bonds, and Build America bonds, see State or Local Government
Obligations in chapter 1 of Pub. 550.

Information-reporting requirement.
 If you file a tax return, you are required to show any tax-exempt
interest you received on your return. This is an information-reporting
requirement only. It doesn't change tax-exempt interest to taxable
interest.
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