United States Code
USC most recently checked for updates: Feb 26, 2020
Income of States, municipalities, etc.
Gross income does not include—
income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or
income accruing to the government of any possession of the United States, or any political subdivision thereof.
cite as: 26 USC 115