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Minneota, MN | I live in Minnesota, and interest income from direct government obligations (see below) is exempt from state income tax. If the interest paid on a government bond is 5.00%, and the Minnesota marginal state tax rate is 7%, the pretax yield of a government bond would be 35 basis points higher as compared to an interest rate that is fully taxable on a state level. Below is information taken from the Minnesota Department of Revenue regarding the taxability of various direct government obligations. As always, consult a CPA for your particular situation!
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Interest income you received from U.S. bonds, bills, notes and other obligations is taxable by the federal government and generally exempt from Minnesota income tax.
These agencies generally issue obligations that are exempt from Minnesota income tax and for which a subtraction is allowed:
Bank for Cooperatives
Commodity Credit Corporation
Farm Credit System Financial Assistance Corporation
Federal Deposit Insurance Corporation
Federal Farm Credit Administration
Federal Home Loan Banks
Federal Intermediate Credit Banks
Federal Land Bank Associations
Federal Land Banks
Federal Savings and Loan Insurance Corporation
Financing Corporation
General Insurance Fund of the Department of Housing and Urban Development, including:
Armed Services Housing
National Defense Housing Insurance
Neighborhood Conservation Housing Insurance
Production Credit Associations
Rental Housing Insurance
Rental Housing Project
Resolution Funding Corporations
Student Loan Marketing Association (Sallie Mae)
Tennessee Valley Authority
U.S. Postal Service
U.S. Treasury Department (notes, bonds, bills, savings bonds, freedom shares, certificates of indebtedness, or TIPS)
War Housing Insurance | |
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Edward Jones
