Skip Header and Navigation

Printer-friendly version of a Department of Revenue web page. Back to Full Screen Display

Wisconsin Department of Revenue

 Individual Income Tax
State and Municipal Bond Interest

  1. Is interest I earn on state and municipal bond obligations subject to Wisconsin income tax?
  2. I have an obligation issued by a state other than Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?
  3. I have an obligation issued by a political subdivision (county, city, village, etc.) of a state other than Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?
  4. I have an obligation issued by the State of Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?
  5. I have an obligation issued by a political subdivision of Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?
  6. Washington, D.C., is not a state or a political subdivision of any state. Is interest earned on obligations issued by Washington, D.C., subject to Wisconsin income tax?
  7. Puerto Rico, Guam, and the Virgin Islands are not states or political subdivisions of any state. Is interest earned on obligations issued by Puerto Rico, Guam, and the Virgin Islands subject to Wisconsin income tax?
  8. Where can I find more information about the income tax status of interest and dividends received from government and other securities?
  1. Is interest I earn on state and municipal bond obligations subject to Wisconsin income tax?

    Generally, interest earned on state and municipal obligations is subject to Wisconsin income tax and should be included as an addition to federal adjusted gross income on your Wisconsin income tax return. However, interest earned on specific state and municipal obligations is exempt from Wisconsin and federal income tax.

    Interest earned on the following state and municipal obligations is exempt from both Wisconsin and federal income tax:

    • Public housing authority and community development authority bonds issued by municipalities located in Wisconsin,
    • Wisconsin Housing Finance Authority bonds,
    • Wisconsin municipal redevelopment authority bonds,
    • Wisconsin higher education bonds,
    • Wisconsin Housing and Economic Development Authority bonds issued on or after December 11, 2003, to fund multifamily affordable housing or elderly housing projects,
    • Wisconsin Housing and Economic Development Authority bonds issued before January 29, 1987, except business development revenue bonds, economic development revenue bonds, and CHAP housing revenue bonds,
    • Public housing agency bonds issued before January 29, 1987, by agencies located outside Wisconsin where the interest is exempt for a reason other than or in addition to section 103 of the Internal Revenue Code,
    • Local exposition district bonds,
    • Wisconsin professional baseball park district bonds,
    • Bonds issued by the government of Puerto Rico, Guam, or the Virgin Islands, or for bonds issued after October 16, 2004, the Government of American Samoa
    • Local cultural arts district bonds, and
    • Wisconsin professional football stadium district bonds
    • Wiconsin Aerospace Authority bonds.

  2. I have an obligation issued by a state other than Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?

    Residents of Wisconsin are taxed on obligations issued by another state except for public housing agency bonds issued before January 29, 1987, by agencies located outside Wisconsin where the interest is exempt for a reason other than or in addition to section 103 of the Internal Revenue Code.

  3. I have an obligation issued by a political subdivision (county, city, village, etc.) of a state other than Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?

    Residents of Wisconsin are taxed on obligations issued by a political subdivision of another state except for public housing agency bonds issued before January 29, 1987, by agencies located outside Wisconsin where the interest is exempt for a reason other than or in addition to section 103 of the Internal Revenue Code.

  4. I have an obligation issued by the State of Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?

    Generally, the interest is taxable by Wisconsin except for the following securities:

    • Higher education bonds issued by the state of Wisconsin.
    • Wisconsin Housing and Economic Development Authority (WHEDA) bonds issued on or prior to January 28, 1987, except business development revenue bonds, economic development revenue bonds, and CHAP housing revenue bonds issued by WHEDA.
    • WHEDA bonds issued to fund a loan under sec. 234.935, Wis. Stats.
    • WHEDA bonds issued under sec. 234.65, Wis. Stats., to fund an economic development loan to finance construction, renovation, or development of property that would be exempt under sec. 70.11(36), Wis. Stats.
    • Wisconsin Housing Finance Authority bonds
    • Bonds and notes issued on or after December 11, 2003 by WHEDA for multi-family affordable housing and elderly housing projects.

  5. I have an obligation issued by a political subdivision of Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?

    Generally, the interest is taxable by Wisconsin except for the following securities:

    • Public housing authority bonds issued by municipalities located in Wisconsin.
    • Redevelopment authority bonds issued by municipalities located in Wisconsin.

  6. Washington, D.C., is not a state or a political subdivision of any state. Is interest earned on obligations issued by Washington, D.C., subject to Wisconsin income tax?

    Generally, interest from obligations of Washington, D.C., is subject to Wisconsin income tax except for the following:

    • District of Columbia general obligation bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation for a reason other than or in addition to section 103 of the Internal Revenue Code.
    • Stripped general obligation bond certificates attributable to certain District of Columbia general obligation bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation under section 1286 of the Internal Revenue Code and D.C. Code Ann. 47-332.

  7. Puerto Rico, Guam, and the Virgin Islands are not states or political subdivisions of any state. Is interest earned on obligations issued by Puerto Rico, Guam, and the Virgin Islands subject to Wisconsin income tax?

    No. Federal law prohibits any state from imposing an income tax on interest from any obligation issued by Puerto Rico, Guam, or the Virgin Islands.

  8. Where can I find more information about the income tax status of interest and dividends received from government and other securities?

    More information can be found at Wisconsin Administrative Code sec. Tax 3.095.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Customer Service and Education Bureau
P.O. Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2486
Fax: (608) 267-1030
E-Mail Additional Questions

Last updated December 21, 2007