Box 13 on Form 1099-DIV, labeled “Specified Private Activity Bond Interest Dividends,” reports the portion of your tax-exempt fund dividends that came from specified private activity bonds (SPABs). That income is still free from regular federal income tax. The reason it gets its own box is the Alternative Minimum Tax: SPAB interest is a preference item that must be added back when you test whether you owe AMT. For 2026, the AMT exemption shelters the first $90,100 of alternative minimum taxable income for single filers and $140,200 for joint filers, so a Box 13 figure by itself rarely means extra tax. You still have to run the calculation on Form 6251 to prove it.
What Box 13 Is Reporting
When you hold municipal bonds through a mutual fund or other regulated investment company, the fund reports your total tax-exempt interest in Box 12 of Form 1099-DIV. Box 13 is a subset of Box 12. It isolates the piece of that tax-exempt income that came from a particular kind of muni bond: a private activity bond whose interest counts as a tax preference item.1Internal Revenue Service. Instructions for Form 1099-DIV The amount reflects your proportionate share of the fund’s SPAB interest, reduced by an allocable share of fund expenses.
A private activity bond is a municipal bond where the proceeds primarily benefit a private business rather than a purely governmental purpose. Federal law flags a bond as a PAB when more than 10 percent of proceeds fund a private business use and more than 10 percent of debt service comes from that private activity.2Office of the Law Revision Counsel. 26 U.S. Code 141 – Private Activity Bond; Qualified Bond Airport revenue bonds and solid waste facility bonds are common examples.
The “specified” label narrows the group further. A specified private activity bond is a PAB issued after August 7, 1986, whose interest is excluded from gross income under Section 103. The tax code treats interest on those bonds as a preference item for AMT purposes.3Office of the Law Revision Counsel. 26 USC 57 – Items of Tax Preference That is what triggers a Box 13 entry.
When Box 13 Actually Costs You Money
Seeing a number in Box 13 does not mean you owe AMT. The AMT is a parallel tax calculation. You compute your regular tax and your AMT, and you pay whichever is higher. To get to AMT, you start with your regular taxable income, add back preference items and adjustments (SPAB interest among them), subtract the AMT exemption, and apply the AMT rates.3Office of the Law Revision Counsel. 26 USC 57 – Items of Tax Preference
For 2026, the AMT rates are 26 percent on the first $175,000 of income above the exemption and 28 percent above that.4Office of the Law Revision Counsel. 26 U.S. Code 55 – Alternative Minimum Tax Imposed The 2026 exemption amounts are:5Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- Single filers: $90,100, phasing out starting at $500,000 of AMTI
- Married filing jointly: $140,200, phasing out at $1,000,000
- Married filing separately: $70,100
- Estates and trusts: $31,400
The exemption phases out by 25 cents for every dollar of AMTI above the threshold and disappears entirely at high enough income. If your AMTI stays under the exemption, no AMT is due no matter how much SPAB interest you earned.
The investors who actually feel the effect of Box 13 tend to have high AMTI already: significant capital gains, large add-backs from other preference items, or high income overall. In that zone, even a moderate SPAB figure can push AMTI above the exemption. Far below the phaseout, SPAB interest is functionally free of AMT.
How to Report It on Your Return
Reporting takes two entries.
First, on Form 1040, Line 2a (“Tax-exempt interest”), you enter your total tax-exempt interest, which for a fund investor is the full Box 12 amount.6Internal Revenue Service. Instructions for Form 1040 Line 2a is informational and does not raise your regular taxable income.
Second, on Form 6251, Line 2g (“Interest from specified private activity bonds exempt from the regular tax”), you enter the Box 13 amount.7Internal Revenue Service. Form 6251 – Alternative Minimum Tax – Individuals Form 6251 adds that figure to your AMTI, compares the result to the exemption, and produces your AMT liability, if any.
Run Form 6251 even when you’re sure no AMT is due. The completed form is how you document that conclusion. If the IRS later determines that AMT was owed, you face interest at 7 percent per year, compounded daily, plus a possible 20 percent accuracy-related penalty on a substantial understatement.8Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
The Social Security Side Effect
AMT is not the only place Box 13 matters. All of your tax-exempt interest, including the SPAB portion, is added back when calculating the modified AGI that determines how much of your Social Security benefits are taxable.9Office of the Law Revision Counsel. 26 U.S. Code 86 – Social Security and Tier 1 Railroad Retirement Benefits Tax-exempt income that never touches your taxable income line can still push provisional income high enough to make up to 85 percent of your benefits taxable. This applies to Box 12 as a whole, not just Box 13, but it is worth knowing if you’re a retiree holding muni funds for tax efficiency.
Bonds That Don’t Land in Box 13
A fund can hold private activity bonds and still report little or nothing in Box 13, because several categories of PABs are carved out of the “specified” definition. Interest on these bonds is exempt for both regular tax and AMT purposes:3Office of the Law Revision Counsel. 26 USC 57 – Items of Tax Preference
- Qualified 501(c)(3) bonds, which fund nonprofit hospitals, universities, and similar organizations
- Qualified residential rental project bonds, qualified mortgage bonds, and qualified veterans’ mortgage bonds
- PABs issued before August 8, 1986, and refunding bonds that replace such pre-1986 debt
- PABs issued during calendar years 2009 and 2010, which Congress temporarily exempted from AMT treatment
If your fund holds mostly these categories, Box 13 will be small or zero even though the fund owns PABs. If Box 13 is meaningful, the fund likely holds airport revenue bonds, solid waste bonds, or similar post-1986 PABs outside the carveouts.
If You Own Individual Bonds Instead of a Fund
The 1099-DIV Box 13 reporting applies to mutual fund and RIC investors. If you own an individual specified private activity bond directly, the interest is reported to you in Box 9 of Form 1099-INT, labeled “Specified Private Activity Bond Interest.” Brokerages must report any amount of $10 or more.10Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID The AMT treatment is identical: the amount goes on Line 2g of Form 6251, and the rest of the reporting works the same way.