Line 2 Additions (see page 5 of the Maryland Resident Instructions)
"Line 2. TAX EXEMPT STATE OR LOCAL BOND INTEREST. Enter the interest from non-Maryland state or local bonds or other obligations (less related expenses). This includes interest from mutual funds that invest in non-Maryland state or local obligations. Interest earned on obligations of Maryland or any Maryland subdivision is exempt from Maryland tax and should not be entered on this line."
So you would want interest from state and local bonds that are sited in Maryland. Think municipal bonds of Maryland towns and cities (and counties).
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