Supreme Court Upholds Tax Treatment In Which Only In-State Governmental Bonds Are Tax-Exempt
On May 19, 2008, the Supreme Court validated a differential tax scheme exempting interest earned on bonds issued by it or its political subdivisions from state income taxation, without extending the same exemption for interest on bonds issued by other States or subdivisions. By reversing 7-2 the Kentucky Court of Appeals' decision in Department of Revenue of Kentucky v. Davis, the Court upheld a system of taxation adopted by 41 states that affects trillions of dollars worth of state-issued bonds.
To view the Supreme Court's Opinion in Department of Revenue of Kentucky v. Davis, please click here.