“Non-Arizona
municipal interest” is interest income you
have received from municipal bonds issued by cities or municipalities outside
the State of Arizona.
TurboTax asks this question because while interest from municipal bonds is generally tax-free
at the federal level, each state may or may not tax it. In the case of Arizona,
the state taxes the interest income from municipal bonds of cities and
municipalities outside the State.
If you don’t
own any municipal bonds, just enter zero and continue.
For more
information on municipal bond interest in Arizona, see Arizona Department of
Revenue FAQ under Taxable Income (in the pulldown menu).
