1. ​Is interest I earn on state and municipal bond obligations subject to Wisconsin income tax?
   
   
2. I have an obligation issued by a state other than Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?
   
   
3. I have an obligation issued by a political subdivision (county, city, village, etc.) of a state other than Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?
   
   
4. I have an obligation issued by the State of Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?
   
   
5. I have an obligation issued by a political subdivision of Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?
   
   
6. Washington, D.C., is not a state or a political subdivision of any state. Is interest earned on obligations issued by Washington, D.C., subject to Wisconsin income tax?
   
   
7. Puerto Rico, Guam, the Northern Mariana Islands, American Samoa, and the Virgin Islands are not states or political subdivisions of any state. Is interest earned on obligations issued by Puerto Rico, Guam, the Northern Mariana Islands, American Samoa, and the Virgin Islands subject to Wisconsin income tax?
   
   
8. Where can I find more information about the income tax status of interest and dividends received from government and other securities?
   
   

1. Is interest I earn on state and municipal bond obligations subject to Wisconsin income tax?

   Generally, interest earned on state and municipal bond obligations is subject to Wisconsin income tax and should be included as an addition to federal adjusted gross income on your Wisconsin income tax return. However, interest earned on specific state and municipal bond obligations is exempt from Wisconsin and federal income tax. See line 1 of the instructions for Schedule AD or Schedule M for a list of state and municipal bond obligations whose interest is exempt for federal and Wisconsin. You can also refer to sec. Tax 3.095 of the Wisconsin Administrative Code.

2. I have an obligation issued by a state other than Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?

   Residents of Wisconsin are taxed on interest from obligations issued by another state, except for public housing agency bonds issued on or prior to January 28, 1987, by agencies located outside Wisconsin where the interest is exempt from federal taxation for a reason other than or in addition to sec. 103, IRC.

3. I have an obligation issued by a political subdivision (county, city, village, etc.) of a state other than Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?

   Residents of Wisconsin are taxed on interest from obligations issued by a political subdivision of another state, except for public housing agency bonds issued on or prior to January 28, 1987, by agencies located outside Wisconsin where the interest is exempt from federal taxation for a reason other than or in addition to sec. 103, IRC.

4. I have an obligation issued by the State of Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?

   Generally, the interest is taxable by Wisconsin except for interest from the following securities:

   • WHEDA bonds issued on or prior to January 28, 1987, except business development revenue bonds, economic development revenue bonds, and CHAP housing revenue bonds issued by WHEDA
   • Wisconsin Housing Finance Authority bonds
   • Bonds and notes issued on or after January 1, 2004, by WHEDA for multi-family affordable housing and elderly housing projects
   • WHEDA bonds or notes if the bonds or notes are issued to provide loans to a public affairs network under sec. 234.75, Wis. Stats.
   • WHEFA bonds or notes if the bonds or notes are issued for the benefit of a person who is eligible to receive the proceeds of bonds or notes from another entity for the same purpose for which the bonds or notes are issued and the interest income received from the other bonds or notes is exempt from taxation under subchapter 1 of ch. 71, Wis. Stats.
   • WHEDA bonds issued to fund an economic development loan to finance construction, renovation, or development of property that would be exempt under sec. 70.11 (36), Wis. Stats.
   • Bonds or notes issued by the Wisconsin Aerospace Authority
   • WHEFA bonds or notes issued under sec. 231.03 (6), Wis. Stats., on or after October 27, 2007, if the proceeds from the bonds or notes that are issued are used by a health facility to fund the acquisition of information technology hardware or software
     
     
5. I have an obligation issued by a political subdivision of Wisconsin. How do I know if the interest I earn on this obligation is subject to Wisconsin income tax?

   Generally, the interest is taxable by Wisconsin except for interest from the following securities:

   • Public housing authority bonds issued by municipalities located in Wisconsin
   • Redevelopment authority bonds issued by municipalities located in Wisconsin
   • Bonds or notes issued by a sponsoring municipality borrowing to assist a local exposition district created under subch. 11 of ch. 229, Wis. Stats.
     
     
6. Washington, D.C., is not a state or a political subdivision of any state. Is interest earned on obligations issued by Washington, D.C., subject to Wisconsin income tax?

   Generally, interest from obligations of Washington, D.C., is subject to Wisconsin income tax except for the following:

   • District of Columbia general obligation bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation for a reason other than or in addition to sec. 103, IRC
   • Stripped general obligation bond certificates attributable to certain District of Columbia general obligation bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation under sec. 1286, IRC and D.C. Code Ann. 47-332
     
     
7. Puerto Rico, Guam, the Northern Mariana Islands, American Samoa, and the Virgin Islands are not states or political subdivisions of any state. Is interest earned on obligations issued by the Governments of Puerto Rico, Guam, Northern Mariana Islands, American Samoa, and the Virgin Islands subject to Wisconsin income tax?

   No, except for certain bonds issued by American Samoa prior to October 17, 2004. Federal law prohibits any state from imposing an income tax on interest from any obligation issued by the Governments of:

   • Puerto Rico – 48 U.S.C. § 745
   • Guam – 48 U.S.C. § 1423a
   • Northern Mariana Islands – 48 U.S.C. § 1801 and § 607 (a) of the Covenant to Establish a Commonwealth of the Northern Mariana Islands
   • American Samoa (bonds issued after October 16, 2004) – 48 U.S.C. § 1670
   • Virgin Islands – 48 U.S.C. § 1574 (b) (ii) (A)
     
     
8. Where can I find more information about the income tax status of interest and dividends received from government and other securities?

   More information can be found at Wisconsin Administrative Code sec. Tax 3.095.
   
   

Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of December 2, 2024: secs. 71.05 and 71.26, Wis. Stats., sec. Tax 3.095, Wis. Adm. Code, title 48 of the U.S. Code, and Section 607 of the Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States of America.

Laws enacted and in effect after this date, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to this date, that is contrary to the information in this document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.

The department welcomes your input on our guidance. Submit comments on this guidance document.

Guidance Document Number: 100209

December 2​, 2024