Expert Q&A

Basically, most interest is taxable. Interest on bank accounts, money market accounts, and CDs is taxable, as are credit union dividends.

US Savings Bond interest is taxable to the federal government, but not the state, and may not have to be reported until the bond is redeemed. Other US government interest is also taxable to the feds but not the state.

Other bonds purchased at a discount may require part of the discount be reported each year as interest (OID, original issue discount).

Interest from a privately held mortgage or other note is also taxable.

Interest from certain municipal bonds may be tax-exempt at the federal and/or state level.