Tax exempt interest

[Pschery]

• Invested in triple tax free bonds in 2025 that generated 1099INT for year end reporting.  After entering the tax exempt interest, it increased my NYS taxes and I’m not sure why.  Is there something I should be doing on the NYS form to eliminate this taxable income?

[ThomasM125]

Yes, In the New York State section, you need to edit the US Government or NY state exempt income section which you will find under the Investment adjustments Menu. You will find that on the screen that says Changes to Federal Income. There you will enter the portion of New York and US government investment income that is exempt from tax in New York.

When you enter your Form 1099-INT to report the interest income on your federal tax return, you need to enter the interest income in box 3 for US treasury interest and also in box 8 for tax-exempt interest. In that same section you will come to a screen that says Tell us more about your Tax Exempt Interest. On that screen you need to enter the amount of the tax exempt interest and the name of the state (New York).