Is SPAXX state tax exempt? 50.90% of its 2025 dividends, but not in California, Connecticut or New York

Fidelity reports that 50.90% of the 2025 income of Fidelity Government Money Market Fund (SPAXX) came from U.S. government securities. In 36 states that share of your SPAXX dividends is exempt from state income tax. In California, Connecticut and New York none of it is: Fidelity marks SPAXX with an asterisk, which its 2025 letter explains as “This fund did not meet the minimum investment in U.S. government securities required to exempt the distribution from tax in California, Connecticut, and New York.” 9 states do not tax dividends, and the District of Columbia, Hawaii and Kentucky have no rule we could find that extends their exemption to fund dividends.

• The number to use: 50.90% of the ordinary dividends from SPAXX on your 2025 Form 1099-DIV. Of $1,000 of SPAXX dividends, $509.00 is U.S. government income. Where to find the amount, in Fidelity's words: “For Fidelity brokerage accounts: in the Supplemental Information portion of your 2025 1099 Tax Statement, find the Details of 1099-DIV Transactions, Total Ordinary Dividends and Distributions Detail section.”
• 50.90% is not the 50% test. The percentage measures where the fund's income came from. California, Connecticut and New York look at what the fund held: “California, Connecticut, and New York exempt dividend income only when a fund has met a certain minimum investment in U.S. government securities.” California's rule, for example, is at least 50% of the fund's assets in U.S. obligations at the end of each quarter. A fund can earn more than half its income from government securities and still miss that test, as SPAXX did in 2025.
• 2024 was different. Fidelity's 2024 letter gave SPAXX 55.09% with no asterisk: it met the test, so part of its 2024 dividends was exempt in California, Connecticut and New York too. Use the letter for the year on your return.
• Fidelity's Treasury Only fund passed. Fidelity Treasury Only Money Market Fund (FDLXX) was 98.67% for 2025 with no asterisk. On September 30, 2026 it had the same 7-day yield as SPAXX, 3.48%.
• Federal tax still applies. SPAXX's dividends are taxed as ordinary income on your federal return; only the state exemption depends on this percentage.

Fidelity's government and Treasury money funds, 2025 and 2024

SPAXX in all 50 states and D.C., and what FDLXX would keep instead

The share of SPAXX's 2025 dividends each state exempts, and the yield left after federal and state income tax for a single filer aged 35 with $90,000 of wages and $50,000 in the fund for a year, at the 7-day yields Fidelity reported for September 30, 2026: SPAXX 3.48% and FDLXX 3.48%. The last column is what FDLXX would leave you over SPAXX in a year.

What it costs in California, Connecticut and New York

For a single filer aged 35 with $90,000 of wages and $50,000 in the fund for a year, SPAXX's $1,770.03 of dividends adds $164.61 to California tax; the same money in FDLXX adds $2.19. In Connecticut the figures are $122.35 and $1.29, and in New York $104.43 and $1.39. In the 36 states that exempt SPAXX's 50.90%, FDLXX keeps $16.48 to $73.98 more a year for the same filer, because 98.67% of its income is exempt instead of 50.90%. Where there is no tax on dividends, the two are equal at the same yield. To try your own income and balance, use our cash yield after tax calculator, which runs the same rules.

How we built the tables

• The fund shares are Fidelity's own 2025 and 2024 letters, read October 4, 2026.
• Each state's rule was read from its own instructions, regulations or statutes; the links are in the table. They are the rules in our cash yield after tax calculator, and the after-tax figures come from the reference code that produces its published test cases.
• The yields are the 7-day yields on Fidelity's fund pages for September 30, 2026. A money fund's yield changes every day; we update these with our monthly cash rate record.
• For SGOV and seven other Treasury ETFs and money funds, see Is SGOV state tax exempt?; for twelve funds from five sponsors side by side, see state tax exempt money market funds.

Rechecks and changes

We will update the shares when Fidelity publishes its 2026 letter, usually in January or February, and the yields every month.

• October 4, 2026. First published.

Sources: Fidelity, 2025 Percentage of Income from U.S. Government Securities (tax year 2025 letter); Fidelity, 2024 Percentage of Income from U.S. Government Securities (tax year 2024 letter); Fidelity, SPAXX fund page (7-day yield); Fidelity, FDLXX fund page (7-day yield); and each state's source in the table. Dollars Ahead is not affiliated with Fidelity or any state. This page reports what Fidelity and the states publish and what their rules produce for one example. It is not tax advice.