I have a client with New York State tax free municipal bonds. They just moved to Maine. The bonds are part of the Franklin Templeton New York tax free mutual fund. In regards to these bonds, what, if anything do they have to pay taxes on?

ANSWER

The BIDaWIZ Team's Answer:

The holdings are subject to state taxes in Maine as per the department of revenue guidance. However, the interest earned isn't taxable at the federal level. The New York state statute indicates that interest earnings from certain municipal bonds are exempt from federal income taxes under section 103(a)(1) of the Internal Revenue Code.