It depends. The exempt interest may be used in a different part of the return that counts all income when determining certain credits and deductions might use it in calculations.
it seems you should allocate income to the spouse it belongs to unless the bonds were purchased in both names. See the instructions in the link and posted below:
- 2024 Instructions for D-40 (page 9)
- Before completing Calculation J, and the Form D-40, you will need to figure the following for you and your spouse/registered domestic partner:
- • Each person's federal adjusted gross income;
- • Each person's additions to federal income;
- • Each person's subtractions from federal income; and
- • Each person's deductions.
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