e-Li: Electronic Library


Government Bonds and Notes

Tennessee Code Annotated
Tennessee Attorney General Opinions
Reference Number: CTAS-1530

The principal and interest on bonds or notes issued by the state of Tennessee for any public purpose are exempt from taxation, except for inheritance, transfer and estate taxes.1The principal and interest on bonds or notes issued by any county, incorporated town or city, for any public purpose are exempt from taxation by the state or by any county or municipality in this state.2United States bonds are exempt from property taxation.3A nonexclusive list of exempt governmental bonds and notes includes the following:

  1. bonds and notes issued pursuant to the Tennessee Local Development Authority Act, T.C.A. § 4-31-101 et seq., and the income therefrom are exempt from taxation by the state or any local governmental unit, except inheritance, transfer and estate taxes;
  2. bonds issued pursuant to the Revenue Bond Law, T.C.A. § 7-34-101et seq., and the income therefrom are exempt from all state, county and municipal taxation except inheritance, transfer and estate taxes;4
  3. bonds issued pursuant to the provisions of the Industrial Building Revenue Bond Act of 1951, T.C.A. § 7-37-101et seq., and the income therefrom are exempt from all state, county and municipal taxation except inheritance, transfer and estate taxes, except as otherwise provided by law;5
  4. bonds issued by any municipality to provide sufficient funds to carry out energy production pursuant to the provisions of T.C.A. § 7-54-101et seq., and the income therefrom are exempt from all state, county and municipal taxation except inheritance, transfer and estate taxes;6
  5. bonds and notes issued by a county pursuant to the Tennessee Home Mortgage Act, T.C.A. § 7-60-101 et seq., and the income therefrom are exempt from taxation, except for inheritance, transfer and estate taxes;7
  6. bonds issued by an authority pursuant to the Port Authority Act, T.C.A. § 7-87-101 et seq., and the income therefrom are exempt from all state, county and municipal taxation, except for inheritance, transfer and estate taxes, and except as otherwise provided by law;8
  7. bonds or notes issued by a local government pursuant to the Local Government Public Obligations Act of 1986, T.C.A. § 9-21-101 et seq., and the income therefrom are exempt from all state, county and municipal taxation except for inheritance, transfer and estate taxes, and except as otherwise provided by law;9
  8. bonds issued by an authority pursuant to the Airport Authorities Act, T.C.A. § 42-3-101 et seq., and the income therefrom are exempt from all taxes;10
  9. bonds issued by an authority pursuant to the Metropolitan Airport Authority Act, T.C.A. § 42-4-101 et seq., and the income therefrom are exempt from all state, county and municipal taxation except for inheritance, transfer and estate taxes, and except as otherwise provided by law;11and
  10. school bonds issued pursuant to the provisions of T.C.A. § 49-3-1002 and the income therefrom are exempt from all state, county and municipal taxation except for inheritance, transfer and estate taxes and except as otherwise provided by law.12

     1T.C.A. § 67-5-205(a)(1).

     2T.C.A. § 67-5-205(a)(2) and (3).

     331 U.S.C. § 3124.

     4T.C.A. § 7-34-116(b).

     5T.C.A. § 7-37-114.

     6T.C.A. § 7-54-106.

     7T.C.A. § 7-60-211.

     8T.C.A. § 7-87-109(d).

     9T.C.A. § 9-21-117.

     10T.C.A. § 42-3-111(d).

     11T.C.A. § 42-4-109(d).

     12T.C.A. § 49-3-1002(c).