Document Number
89-353
Tax Type
Individual Income Tax
Description
Interest income of government bonds and certificates
Topic
Subtractions and Exclusions
Date Issued
12-20-1989
December 20, 1989



Re: Request for Ruling/Individual Income Tax


Dear****************

This will reply to your letter dated June 28, 1989 in which you request a ruling on the taxability for Virginia income tax purposes of interest income of certain government bonds and certificates.

The taxable income of individuals for Virginia income tax purposes is defined in Virginia Code §58.1-322 (copy enclosed). This section provides in part that:
    • B. To the extent excluded from federal adjusted gross income, there shall be added:
      1. Interest, less related expenses to the extent not deducted in determining federal income, on obligations of any state other than Virginia, or of a political subdivision of any such other state unless created by compact or agreement to which Virginia is a party;
      2. Interest or dividends, less related expenses to the extent not deducted in determining federal taxable income, on obligations or securities of any authority, commission or instrumentality of the United States, which the laws of the United States exempt from federal income tax but not from state income taxes.
In addition, this section provides that:
    • C. To the extent included in federal adjusted gross income, there shall be subtracted:
      1. Interest or dividends on obligations of the United States and on obligations or securities of any authority, commission or instrumentality of the United States to the extent exempt from state income taxes under the laws of the United States including, but not limited to, stocks, bonds, treasury bills, and treasury notes, but not including interest on refunds of federal taxes, interest on equipment purchase contracts, or interest on other normal business transactions.
    • 2. Interest on obligations of this Commonwealth or of any political subdivision or instrumentality of this Commonwealth.
These statutory provisions have been interpreted in Virginia Regulation 630-2-322, copy enclosed. I have also enclosed a copy of Virginia Tax Bulletin 82-3 which further details the department's policy regarding the exemption for interest and dividends contained in Virginia Code §58.1-322 (previously §58-151.013).

In addition, I have included a list indicating the tax status of interest received from various government securities. However, the list which is based upon the department's analysis of federal and state law, is not inclusive of all federal obligations.

If you have any further questions, please do not hesitate to contact the department.

Sincerely,



W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46