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  • In this section, you will find information to assist you in meeting state and federal tax reporting requirements for your T. Rowe Price Tax-Free Fund investments. The total tax-free income earned on each of your tax-free investments and the portion, if any, subject to the alternative minimum tax (AMT) calculation are reported on your 2013 Form 1099-DIV, which is mailed to you in late January.

    Still have questions after reviewing this information? Call us at 1-800-225-5132.

    Municipal Bond Funds Tax Facts

    Although income dividends from municipal bond funds are generally exempt from federal tax, here are some reminders:

    • Exempt-interest dividends paid from T. Rowe Price Tax-Free Funds are reported to the IRS. This amount, which you also must report to the IRS on your tax return, is shown in Box 10 of your Form 1099-DIV and must be reported on Line 8b of your Form 1040 (or Form 1040A) along with any other tax-exempt interest or dividends you may have received.
    • Income dividends from municipal bond funds may be subject to state and local income taxes.
    • You may have to include a portion of your exempt-interest dividends in your calculation of the AMT  (see Exhibit 3—Percentage of Income to Include in the AMT Calculation). This amount is reported in Box 11 of your Form 1099-DIV.
    • Tax-free funds' capital gains may be subject to federal, state, and local taxes. The same rules may apply if you have sold shares of tax-free funds.

      • Fund capital gain distributions (if any) are reported on Form 1099-DIV—mailed in late January (mid-February for T. Rowe Price Real Assets, Real Estate, Global Real Estate, and Small-Cap Value Funds)
      • Proceeds from your own sales of fund shares are reported on Form 1099-B—mailed in late January (mid-February for T. Rowe Price Real Assets, Real Estate, Global Real Estate, and Small-Cap Value Funds)
    • If you receive tax-free income and receive Social Security benefits, your benefits are subject to an increase in income taxes.

    Because of the complexity and diversity of state requirements, you may want to consult a tax advisor or contact your state tax authority on taxability of income and gains and other reporting requirements. If you need help regarding your personal federal tax filings, you may want to consult a tax advisor or contact the IRS at:

    1-800-829-1040 for federal tax information
    1-800-829-3676 to order IRS forms, or go to the website at www.irs.gov

    Exhibit 1—Sources of National Tax-Free Funds' Income

    Depending on your state's tax laws, you may be able to exempt the portion of your income dividend attributable to interest earned by a fund on securities issued by your state. Please check your state's requirements. For your convenience, the percentage of your fund's dividend that may be excluded from your state income tax calculation is listed below. This percent should be multiplied by the amount of exempt-interest dividends for each fund as reported in Box 10 of your Form 1099-DIV. In addition, check your state's rules to see if you also may exclude the percentages attributable to U.S. territories.

    Tax-Free Funds
    Origin Tax-Free High Yield Tax-Free Income* Tax-Exempt Money Tax-Free Short-Intermediate
    Alabama 0.65% 0.36% 0.00% 0.78%
    Alaska 0.00% 0.00% 1.67% 0.00%
    Arizona 2.09% 1.94% 0.33% 1.77%
    Arkansas 0.00% 0.14% 0.00% 0.02%
    California1 9.96% 14.68% 7.92% 9.58%
    Colorado 2.47% 1.76% 3.28% 2.79%
    Connecticut 2.41% 1.12% 0.06% 0.00%
    Delaware 1.32% 0.41% 0.88% 0.09%
    District of Columbia 1.77% 4.78% 0.73% 2.89%
    Florida 5.21% 7.02% 4.37% 12.41%
    Georgia 1.65% 2.99% 5.76% 3.54%
    Hawaii 0.36% 0.27% 0.64% 0.81%
    Idaho 0.27% 0.07% 0.95% 0.00%
    Illinois2 5.93% 8.54% 5.75% 3.99%
    Indiana3 70.67% 84.66% 27.36% 73.59%
    Iowa4 1.23% 0.22% 0.00% 0.00%
    Kansas 0.11% 0.29% 0.19% 0.70%
    Kentucky 1.19% 0.47% 0.62% 0.01%
    Louisiana 1.88% 0.75% 0.02% 0.05%
    Maine 0.29% 0.00% 0.00% 0.00%
    Maryland 6.40% 3.73% 12.00% 7.95%
    Massachusetts 0.54% 2.16% 1.55% 1.04%
    Michigan 0.61% 0.41% 0.72% 0.69%
    Minnesota1 0.46% 0.06% 1.87% 0.37%
    Mississippi 0.64% 0.20% 3.26% 0.41%
    Missouri 0.83% 1.39% 1.14% 0.71%
    Montana 0.00% 0.00% 0.01% 0.00%
    Nebraska 0.00% 0.12% 0.00% 0.00%
    Nevada 0.19% 1.26% 0.00% 1.94%
    New Hampshire 0.00% 0.25% 0.00% 0.29%
    New Jersey 6.41% 6.09% 0.70% 4.53%
    New Mexico 0.00% 0.38% 0.00% 0.00%
    New York 7.53% 10.31% 7.33% 15.71%
    North Carolina 1.66% 1.32% 5.23% 3.26%
    North Dakota 0.58% 0.53% 0.00% 0.00%
    Ohio 2.63% 0.94% 1.68% 1.10%
    Oklahoma4 1.04% 0.31% 0.00% 0.28%
    Oregon 0.59% 0.51% 1.04% 0.02%
    Pennsylvania 4.54% 2.97% 3.37% 2.53%
    Rhode Island 0.64% 0.28% 0.10% 0.00%
    South Carolina 0.57% 0.93% 2.60% 3.03%
    South Dakota 0.35% 0.91% 0.55% 0.19%
    Tennessee 2.42% 1.04% 2.25% 1.78%
    Texas 11.01% 8.39% 9.10% 5.83%
    Utah5 27.12% 36.21% 19.97% 27.53%
    Vermont 0.00% 0.00% 0.00% 0.00%
    Virginia 5.71% 5.77% 7.33% 5.44%
    Washington 0.72% 2.14% 2.68% 1.93%
    West Virginia 0.50% 0.60% 0.00% 0.00%
    Wisconsin4 0.64% 0.00% 0.82% 0.10%
    Wyoming 0.00% 0.00% 0.00% 0.00%
    U.S. Territories
    Guam 0.35% 0.00% 0.00% 0.00%
    Northern Marianas 0.00% 0.00% 0.00% 0.00%
    Puerto Rico 1.51% 0.76% 0.00% 0.18%
    Virgin Islands 0.55% 0.26% 0.00% 0.00%
    *Percentages are the same for all fund classes (Investor and Advisor)
    Summit Municipal Funds
    Origin Summit Municipal Income Summit Municipal Intermediate Summit Municipal Money Market
    Alabama 0.65% 0.43% 0.00%
    Alaska 0.13% 0.29% 0.71%
    Arizona 0.76% 0.88% 0.13%
    Arkansas 0.23% 0.13% 0.00%
    California1 19.11% 11.41% 6.44%
    Colorado 0.68% 2.48% 2.30%
    Connecticut 1.06% 0.06% 0.16%
    Delaware 1.26% 0.16% 0.83%
    District of Columbia 3.33% 2.03% 2.83%
    Florida 6.59% 10.33% 1.47%
    Georgia 2.37% 2.74% 2.26%
    Hawaii 0.00% 1.23% 0.35%
    Idaho 0.00% 0.00% 0.76%
    Illinois2 3.12% 3.54% 7.42%
    Indiana3 67.92% 72.53% 28.38%
    Iowa4 0.38% 0.43% 0.03%
    Kansas 1.27% 1.10% 0.15%
    Kentucky 0.66% 0.10% 2.08%
    Louisiana 0.69% 0.95% 0.27%
    Maine 0.20% 0.00% 0.00%
    Maryland 5.51% 4.58% 11.78%
    Massachusetts 1.18% 1.72% 1.90%
    Michigan 0.09% 0.71% 1.72%
    Minnesota1 0.36% 0.55% 1.18%
    Mississippi 0.07% 0.00% 2.62%
    Missouri 1.83% 0.84% 1.45%
    Montana 0.00% 0.00% 0.03%
    Nebraska 0.17% 0.00% 0.13%
    Nevada 1.69% 1.66% 0.73%
    New Hampshire 0.00% 0.35% 2.35%
    New Jersey 9.51% 4.37% 0.47%
    New Mexico 0.13% 0.10% 0.03%
    New York 12.46% 11.56% 7.99%
    North Carolina 0.83% 2.61% 3.57%
    North Dakota 0.00% 0.10% 0.00%
    Ohio 0.74% 1.56% 0.78%
    Oklahoma4 0.56% 0.28% 0.00%
    Oregon 0.18% 0.25% 4.06%
    Pennsylvania 3.01% 2.76% 3.12%
    Rhode Island 0.11% 0.10% 0.07%
    South Carolina 0.44% 1.42% 1.69%
    South Dakota 1.18% 0.21% 0.50%
    Tennessee 0.69% 1.22% 1.49%
    Texas 9.08% 15.22% 7.94%
    Utah5 24.89% 35.34% 22.99%
    Vermont 0.00% 0.00% 0.00%
    Virginia 6.31% 4.39% 6.16%
    Washington 0.36% 3.62% 4.72%
    West Virginia 0.59% 0.04% 0.00%
    Wisconsin4 0.15% 0.28% 3.60%
    Wyoming 0.00% 0.00% 0.02%
    U.S. Territories
    Guam 0.00% 0.00% 0.00%
    Northern Marianas 0.00% 0.00% 0.00%
    Puerto Rico 0.32% 0.09% 0.00%
    Virgin Islands 0.17% 0.06% 0.00%
    1All of the dividend income is subject to state tax because minimum threshold requirements were not met in 2013.

    2Illinois does not exempt the portion of dividends from state or local obligations held indirectly through a mutual fund.

    3Includes interest earned on Indiana and applicable non-Indiana obligations, including U.S. territories, and interest on certain states' obligations acquired before January 1, 2012.

    4Some dividend income may be subject to tax. Only certain specified obligations are exempt in this state. Please consult with your tax advisor.

    5Includes interest earned on Utah and applicable non-Utah obligations, including U.S. territories, and interest on certain states' obligations acquired before January 1, 2003.

    Note: Column totals may add up to more than 100% because income on some bonds is exempt in more than one state.
    Exhibit 2—Taxability of State Tax-Free Funds' Dividend Income

    All of the funds' dividends are exempt from federal income tax, and certain portions also will be exempt from state taxes for investors filing in that state.

    To determine the state tax treatment of your fund dividends, multiply the percentage shown below by each fund's tax-free dividend income shown in Box 10 of your Form 1099-DIV. This amount is exempt from state tax.

    Taxability of State Tax-Free Funds' Dividend Income
    Tax-Free Fund Percent of Dividend Income Exempt from State Tax
    California Bond 100.00%
    California Money 98.28%
    Georgia Bond 100.00%
    Maryland Bond 100.00%
    Maryland Money 98.30%
    Maryland Short-Term Bond 100.00%
    New Jersey Bond 100.00%
    New York Bond 100.00%
    New York Money 98.30%
    Virginia Bond 100.00%
    Exhibit 3—Percentage of Income to Include in the Alternative Minimum Tax Calculation

    This table is relevant only for investors who must calculate the AMT. It reflects the percentage of income earned by each tax-free fund from investments in "private activity" bonds. Such income is subject to the AMT calculation.

    Please note that this table is for informational purposes only. The portion of your exempt-interest dividends, if any, subject to the AMT calculation is reported in Box 11 of your Form 1099-DIV. Please use the Box 11 amount when preparing your tax return, if applicable.

    Percentage of Income to Include in the Alternative Minimum Tax Calculation
    Tax-Free Fund Percent of Fund Income Subject to AMT
    California Bond 6.98%
    California Money 5.89%
    Georgia Bond 4.37%
    Maryland Bond 11.39%
    Maryland Money 14.24%
    Maryland Short-Term Bond 10.26%
    New Jersey Bond 7.62%
    New York Bond 2.35%
    New York Money 8.34%
    Summit Municipal Income 9.77%
    Summit Municipal Intermediate 4.02%
    Summit Municipal Money Market 28.90%
    Tax-Exempt Money 0.00%
    Tax-Free High Yield 12.94%
    Tax-Free Income 0.00%
    Tax-Free Short-Intermediate 8.74%
    Virginia Bond 7.26%