Entering Tax-exempt interest dividends

hslettel · ‎February 12, 2026

I have 2 funds that generated tax exempt dividends totaling $1272.92. In one, 8.39% is exempt in my state and 2.09% in US possessions for a total of 10.48%. 10.48% of the the total earned of $816.19 is $85.54.

In the other fund, 10.04% is exempt in my state and 3.28% in US possessions for a total of 13.32%. 13.32% of the the total earned of $816.19 is $60.85.

I added those together and entered the total of $146.39 as the tax exempt income for my state. I entered the balance (1272.92-146.39) of 1126.53 as the total for multiple states.

Is this the correct way to handle this? Appreciate the help!

SteamTrain

@hslettel

That sounds exactly right.

a BUT though.

It does depend on what state you live in. This is for Mutual Bond Funds or ETFs (not limited if they own individual bonds )

1) For UT residents, they can include some other states (states that don't tax Utah bonds)

2) IL residents cannot do the breakdown at all for Mutual Fund Bond collections and ETFs ...only for individual bonds they own.

3) CA has severe limitations, and you don't appear to be anywhere near their limits. They require that at least 50% of bonds in the fund must be from CA or US Obligations.

4) MN used to be 50% too, but I've read they recently have changed to 95% (not sure this bump-up is true yet)

Might be some strange things in a few other states.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

hslettel

Greatly appreciate your response! I live in California, so it looks like I won't get an exemption out of it. I wish they would eliminate all these exemptions and just simplify the tax code and tax everyone fairly. I'm not a big fan of Trump, but the one thing he did I do appreciate was increase the standard deduction to the point I no longer itemize anything as it doesn't buy me anything. My taxes are much less of a chore, which is as it should be.