Questions & Answers

What interest from U.S. Government obligations is or is not deductible on my Utah tax return?

Interest earned on U.S. Government obligations issued by an agency or instrumentality of the United States is exempt from state income tax.

U. S. Government obligations include:

  • Treasury bills
  • Treasury notes
  • E, EE, H, HH, and I bonds
Income NOT exempt from Utah state income tax includes:
  • Interest or dividends from the Federal National Mortgage Association (FNMA) and the Government National Mortgage Association (GNMA)
  • Interest on refunds from the IRS or any federal agency
Only interest or dividend income from U.S. Government obligations included in your federal adjusted gross income is exempt from state income tax. Before entering an amount, subtract any related expenses claimed as deductions on your federal return, such as interest expense on money borrowed to purchase bonds or securities, or ordinary and necessary expenses paid or incurred in connection with producing exempt income. Keep all records, forms, and worksheets to support this deduction.

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