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Yes, if the interest is from your state.
In general, tax-exempt investment income applicable to your state of residence will automatically transfer to the state section if you have indicated that the tax-exempt interest was from that state.
TurboTax will ask you questions to capture these details and automatically allocate the income accordingly.
Look for the box to check: My form has info in other boxes (this is uncommon). which will open up entry areas for the rest of Form 1099-DIV.
For more information about how the different items reported on Form 1099-DIV are taxed, see: Is There a Dividend Tax? Your Guide to Taxes on Dividends - TurboTax Tax Tips & Videos
Tax exempt interest is reported on Form 1099-INT: Filing Tax Form 1099-INT: Interest Income - TurboTax Tax Tips & Videos
Some clarification on the answer please. Question asked if free from fed taxes or just state tax. Answer was "yes" - is that "Yes, free from fed taxes, BUT ALSO MAY be free from state, depending on your state"?
@Anapp4 The dividends are free of federal taxation in all cases. They are normally free of state taxation also if the bonds that the interest income is associated with are from the state that you live in.
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