Filing your 2025 taxes? Don’t forget to claim the state tax exemption for interest and ordinary dividends earned from US government securities.
Interest and ordinary dividends from US gov securities like treasuries and T-bills are taxable at the federal level but are exempt from state tax in most states.
Many money market funds, ETFs and mutual funds derive some of their ordinary dividends from US gov securities. You’ll need to calculate the portion of your total ordinary dividends that came from US gov securities. The Finance Buff has a great walkthrough on how to do this as well as where to find the relevant field in TurboTax, H&R Block and FreeTaxUSA.
Claim State Tax Exemption From Treasuries in Funds and ETFs
This is what the calculation looks like for my checking account. 51% of the ordinary dividends I received in this account are tax exempt in my state.
