Which type of interest is typically not taxable?

The interest from a qualified volunteer fire department is typically not taxable because certain types of interest income related to specific entities or contributions can be excludable from taxable income. For example, contributions made to organizations like volunteer fire departments often provide tax benefits both for the donor and for interest earned when such organizations invest funds for operational purposes. This aligns with tax policy that encourages support for community services and public safety initiatives.

In contrast, interest from a savings account, a money market account, and savings bonds usually count as taxable income. Savings account and money market interest generally fall under regular taxable interest income. While interest from savings bonds may be tax-deferred until the bonds are cashed or reach maturity, it typically is subject to federal income tax, although it can be exempt from state and local taxes when used for qualified education expenses, altering its tax implications but not entirely exempting it.