capital gains distributions from US government obligations - in which states are these deductible?

Forum|Forum|2 years ago
March 5, 2024
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Turbotax,

Could you please list the states that allow a deduction for capital gains distributions from US government obligations?

MayaD

If this is regarding your VA tax return, Virginia law allows a subtraction for income (interest) derived from obligations or income (dividends and gains) derived from the sale or exchange of obligations of the United States, and on obligations or securities of any authority, commission or instrumentality of the United States to the extent the income is included in federal adjusted gross income. The amount to be subtracted is the income less any related expenses already deducted on the federal return. The subtraction applies only to income from direct obligations. For information on obligations that qualify for the subtraction, see PD 94-281.

VA Department of Taxation

If you need information for another state, please post here for which state.

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Unicorn3Author

Thank you; yes, this is regarding my Virginia tax return. I had seen the statement you quote, but was unsure how to interpret the word "gains." Do these include capital gains distributions? Some states, such as Nebraska, very clearly state that you may not deduct capital gains distributions on your state tax return. Conversely, Maryland explicitly says that you can deduct capital gains distributions on your state tax return. That's why I was hoping Turbotax had a list of states that definitely allow the deduction of capital gains distributions. All I have been able to find out about Virginia is the statement you quote; the VA Taxation Department does not go into any more detail anywhere about what they mean by "gains," at least as far as I can tell. Other documents online mention interest and dividends only. So--are you sure capital gains distributions are deductible in VA?