Pennsylvania Statutes Title 72 P.S. Taxation and Fiscal Affairs § 9901. Taxability of government obligations

(a) Except as provided in subsections (b) and (c), all obligations, interest on obligations and income from obligations issued on or after the effective date of this section by the Commonwealth, any public authority, commission, board or other agency created by the Commonwealth or any political subdivision of the Commonwealth or any public authority created by any political subdivision of the Commonwealth shall at all times be free from taxation for State and local purposes within the Commonwealth.

(b) Government obligations described in subsection (a) shall continue to be subject to inheritance and estate taxes imposed by Article XXI.  1

(c) Profits, gains or income derived from the sale, exchange or other disposition of government obligations described in subsection (a) shall be subject to State or local taxation.