District of Columbia Again Delays Taxation of State and Municipal Interest for Residents

The SALT Shaker

In 2011 the District of Columbia (DC) enacted legislation that would include the interest income earned on obligations of a state or municipality in the taxable income of individuals, estates and trusts.  Before this legislation DC did not tax interest earned on these securities.  The original legislation called for an effective date of October 1, 2011.  The interest income from securities purchased after October 1, 2011 would be subject to tax in DC.  Subsequently, the effective date was delayed to December 31, 2011 and has now been delayed again until after December 31, 2012.  This means that tax-exempt interest will NOT BE SUBJECT to INCOME TAX in 2012.   Instead the taxation of exempt interest will apply to securities purchased after December 31, 2012.

Please contact the KatzAbosch SALT Group if you have any questions regarding the application of this new law.

The SALT Shaker is prepared by Andy Bareham, Chair of the KatzAbosch SALT Group

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