Interest on federally-sponsored credit agency issues (such as the Federal Home Loan Bank) is not tax-free to the recipient.

Question

Quizplus · Accepted Answer

Interest on agency issues is fully taxable for IRS purposes and is generally taxable for state and local purposes, although there are exceptions. (For example, interest on obligations issued by the Federal Farm Credit Bank is subject to state and local taxes, but those of the Federal Home Loan Bank are not.)

Interest on Federally-Sponsored Credit Agency Issues (Such as the Federal