Interest from certain bonds, notes, and other evidences of indebtedness issued by non-federal government entities outside Utah (commonly known as municipal bonds) are subject to Utah income tax if acquired on or after January 1, 2003. However, interest earned on non-Utah municipal bonds is not subject to Utah income tax if the issuing state (or political subdivision) does not impose an income tax on bonds issued by Utah, or the issuing state does not impose an income tax.
A non-federal government entity, for this purpose, is defined as:
Enter the taxable amount on Utah form TC-40A, Part 1, using code 57.
Keep all documentation with your tax records.
The following states and political subdivisions do not impose an income tax on Utah municipal bonds. Accordingly, interest earned on bonds, notes, etc. issued by one of these jurisdictions is not subject to Utah income tax. If you believe a jurisdiction qualifies for the reciprocity exception and is not listed, please contact us at 801-297-7705, or if outside the Salt Lake area, call 1-800-662-4335 extension 7705.
Fiduciary fees and other investment expenses associated with municipal bonds are not deductible from Utah income.