# MUB ETF Tax Trap for New York Retirees

> New York retirees in MUB ETF face state tax on out-of-state bond interest despite tax-free claims.
- Title: MUB ETF Tax Trap for New York Retirees · 24/7 Wall St.
- Summary: New York retirees in MUB ETF face state tax on out-of-state bond interest despite tax-free claims. New York law taxes interest from non-New York municipal…
- Keywords: mub, new york bonds, tax exemption, municipal bonds, i shares, ny tax law, federal tax, state tax, ETF, Tax, Trap, York
- Source: 24/7 Wall St. — https://247wallst.com/investing/etf/2026/10/16/only-19-55-of-mub-is-new-york-bonds-new-york-doesnt-exempt-interest-from-the-rest
- Author: Ryne Mauck
- Published: 2026-10-16T22:03:48+00:00
- Read time: 1 min
- Topics: mub, new york bonds, tax exemption, municipal bonds, i shares, ny tax law, federal tax, state tax
## MUB ETF Tax Trap
New York retirees assume MUB ETF income is tax-free but state law taxes out-of-state bond interest.

> Only 19.55% of MUB Is New York Bonds. New York Doesn’t Exempt Interest From the Rest
## State Tax Rule
N.Y. Tax Law § 612(b)(1) requires adding back interest from other states to federal adjusted gross income.
## Tax Impact
Retirees with $300,000 in MUB earn $9,813 annually but pay New York tax on 80.45% of that income.
## Tax Report Method
iShares reports tax-exempt interest by state; New York at 22.73% of MUB’s tax-exempt income.
## Tax-Equivalent Yield
MUB’s 5.64% tax-equivalent yield overstates after-tax benefit for New York residents.
## Alternative Funds
VTEB tracks national exposure with 17.85% growth vs MUB’s 17.19% over 10 years.
## Tax Strategy
New York residents should check MUB’s tax report and match it against Form 1099-DIV Box 12.
## Key takeaway

New York law taxes interest from non-New York municipal bonds, costing retirees up to $9,813 annually.