US Treasury Bonds and State and Local Bonds

US Treasury bond interest is subject to Federal tax but not state tax. State and local bond interest is exempt from Federal tax and state tax if the bond is from your state of residency. For example, a bond for Fulton County GA is exempt from Federal and Georgia tax if you are a Georgia resident. This can be a nice way to receive totally tax free income. If you are a Georgia resident and you have bond interest from a California city bond, the interest is not subject to Federal tax but  is subject to Georgia tax.