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For the most part, tax exempt interest is not taxable at the federal level and tax exempt at the state level only for the interest you received from bonds issued by your state. In other words, if you are a VA resident, the interest from VA bonds are not taxable at the state level, but interest from Texas bonds are taxable in VA.

Somewhere in the tax information you received from USAA TAX EXEMPT INTERMEDIATE-TERM FUND is a state-by-state breakdown on the interest income. (Most likely a percentage amount.)

As to your federal interest, while it is taxable at the federal level, it is not taxable at the state level.

Unless you have no-name cheap tax software, your software can handle this provided you properly code the interest income.

Hope this helps.

SJ.
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