Tax-Exempt Interest

Tax-Exempt Interest means (see more about entries related to interest in the U.S. here)

Interest paid on bonds issued by states or municipalities that is tax-free for federal income tax purposes. Although you must report this income on your tax return, it is not taxed.

State Income Tax

Description and Definition of Tax-Exempt Interest

Interest paid on bonds issued by states, their political subdivisions, or municipalities. Such interest is exempt from federal income tax. Although you must report this income on your return it's not taxed. Your tax-exempt interest is important for certain tax calculations such as the earned income credit and determining your taxable social security benefits.

Resources

See Also

Further Reading

• Tax-Exempt Interest in the West's Tax Law Dictionary
• Tax-Exempt Interest in “A Dictionary of Taxation”