On July 30, 2013, the District of Columbia retroactively repealed the provision that would have subjected most tax-exempt bonds owned by D.C. residents to D.C. income tax. This change restores the historic position of the District of Columbia exempting from D.C. income tax the interest on municipal bonds issued by any state or municipality. Therefore, municipal bond interest income earned by individuals, estates, and trusts will be exempt from taxation in D.C.
Previously the District of Columbia had enacted legislation that
would have subjected municipal bond interest to tax to take effect
on January 1, 2012. Later legislation delayed the effective
date to January 1, 2013. The most recent legislative action
repeals the provision completely. For more information on the new
law, please visit The D.C. Office of Tax and Revenue's
website.
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This article is designed to give general information on the developments covered, not to serve as legal advice related to specific situations or as a legal opinion. Counsel should be consulted for legal advice.