Internal Revenue Service United States Department of the Treasury
Module 3: Interest Income




interest — the charge for the use of borrowed money.

interest income — the income a person receives from certain bank accounts or from lending money to someone else.

taxable interest income — interest income that is subject to income tax. All interest income is taxable unless specifically excluded.

tax-exempt interest income — interest income that is not subject to income tax. Tax-exempt interest income is earned from bonds issued by states, cities, or counties and the District of Columbia.


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