It seems that interest earned on direct obligations of the U.S. government (such as U.S. Treasury bills, notes and bonds) is generally exempt from state and local income tax. However, GNMA, FNMA and FHLMC securities are not included as U.S. government obligations. Can someone please confirm the above information? What about interest income from Fed Farm Credit, Student Loan, TN Valley Auth, and other entities listed in the “Mutual Fund and UIT Supplemental Information” towards the end of a 1099-DIV from Vanguard? Can someone please clarify this important issue? Thanks. Following is an excerpt from the State of California FTB Publication 1001, 2017, page 5: “Federal law requires the interest earned on federal bonds (U.S.obligations) to be included in gross income. California does not tax this interest income. The following are not considered U.S. obligations for California purposes: Federal National Mortgage
Association (Fannie Mae); Government National Mortgage Association (Ginnie Mae); or Federal Home Loan Mortgage Corporation (Freddie Mac).”
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It seems that interest earned on direct obligations of the U.S. government (such as U.S. Treasury bills, notes and bonds) is generally exempt from state and local income tax. However, GNMA, FNMA and FHLMC securities are not included as U.S. government obligations. Can someone please confirm the above information? What about interest income from Fed Farm Credit, Student Loan, TN Valley Auth, and other entities listed in the “Mutual Fund and UIT Supplemental Information” towards the end of a 1099-DIV from Vanguard? Can someone please clarify this important issue? Thanks. Following is an excerpt from the State of California FTB Publication 1001, 2017, page 5: “Federal law requires the interest earned on federal bonds (U.S.obligations) to be included in gross income. California does not tax this interest income. The following are not considered U.S. obligations for California purposes: Federal National Mortgage Association (Fannie Mae); Government National Mortgage Association (Ginnie Mae); or Federal Home Loan Mortgage Corporation (Freddie Mac).”
Post: Treasury Tax Reporting
Link to comment from April 29, 2026