Any federally tax-exempt income dividends you received from the funds in 2023 are subject to special state income tax considerations. (These dividends are reported in Box 12 of Form 1099-DIV.)
The funds listed below paid some federally tax-exempt income dividends in 2023 that were derived from municipal bond interest subject to the federal alternative minimum tax (AMT).
The Tax-Exempt Bond Fund of America did not pay any federally tax-exempt income dividends derived from municipal bond interest subject to AMT.
You’ll need the amount reported to you in Box 13 of Form 1099-DIV, “Specified private activity bond interest dividends,” to calculate your AMT if that tax applies to you. This amount is a portion of the amount in Box 12.
The AMT calculation is complex. We recommend you consult your tax advisor.
All or some of your federally tax-exempt income dividends may be taxable in your state or jurisdiction.
In fact, some states, such as California, require that mutual funds report the amount of federally tax-exempt income dividends paid to residents of those states. The states that impose no income tax on federally tax-exempt income dividends are listed below.
If you are an individual taxpayer and the state or jurisdiction where you file an income tax return is not shown below, please refer to the Federally tax-exempt income dividends: State tax exclusion worksheet to determine the portion of federally tax-exempt income dividends that may be excluded for state income tax purposes. (Corporations and other entities in the states listed below may be subject to state income taxation on federally tax-exempt income dividends and may need to complete the Federally tax-exempt income dividends: State tax exclusion worksheet.)
100% of the municipal bonds held in American Funds Tax-Exempt Fund of New York and The Tax-Exempt Fund of California were municipal bonds exempt from tax in their respective states.
The federally tax-exempt income dividends from these funds may be excluded from state taxable income in their states. For example, if you are a California taxpayer, all of the federally tax-exempt income dividends from The Tax-Exempt Fund of California may be excluded from your California taxable income.
Additionally, federally tax-exempt income dividends from American Funds Tax-Exempt Fund of New York may be excluded from taxable income in New York City.