Please note that Betterment is not a tax advisor and the information provided should not be construed as tax advice, but should be used for informational purposes only. Please consult a qualified tax professional or the IRS to determine the rules that apply to your individual tax situation.
A portion of the dividend income from your municipal bond ETF holdings may be exempt from state income tax, depending on your state’s tax laws. To calculate the state-specific percentages of your municipal bond ETF holdings, please consult materials from the fund provider. To help, here are some resources below to find more specific information about the holdings of various Municipal Bond funds which may be used in your portfolio:
MUB: iShares Tax-Exempt Interest by State
TFI: SPDRS Prospectus information (download the TFI "Fact Sheet")
California State specific:
CMF: iShares Tax-Exempt Interest by State
New York State specific:
NYF: iShares Tax-Exempt Interest by State
For TurboTax users:
If you are importing a 1099-DIV and Box 10 (Exempt Interest Dividends) is not $0, TurboTax will show you a screen which asks: “Choose the state where your tax-exempt dividends came from:”
From the dropdown, select “More Than One State":
You may also consult the tax form detail and the fund company website (links above) to determine the state(s) associated with your tax-exempt dividends.