Interest from state and municipal obligations

From the 2024 DOR Tax Exemption Study

82.04.4293 - Interest from state and municipal obligations Description Banking, lending, security, and other financial businesses may deduct interest income received from Washington obligations, its political subdivisions, and municipal corporations. Purpose To provide state tax treatment comparable to federal income tax treatment of state and municipal bonds and to reduce the cost of state and local government construction projects financed by bonds. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $65.150 $65.630 $65.970 $66.240 Local Taxes $0.000 $0.000 $0.000 $0.000 Repeal of Repealing this deduction would increase revenues. exemption Potential ($ in millions): revenue gains FY 2024 FY 2025 FY 2026 FY 2027 from full repeal State Taxes $0.000 $60.160 $65.970 $66.240 Local Taxes $0.000 $0.000 $0.000 $0.000 Assumptions - This repeal takes effect July 1, 2024, and impacts 11 months of collections in fiscal year 2025. - State and municipal obligations interest growth mirrors the state and local government receipts and expenditures growth reflected in the March 2023 S&P Global Market Intelligence forecast. - Financial institutions report interest from sta