PROSPECTUS SUPPLEMENT Oct. 9, 1998
The following revises and supersedes the Massachusetts Tax tables found in
Appendix B of the Prospectus, dated Aug 28, 1998, for:
IDS California Tax-Exempt Trust
IDS California Tax-Exempt Fund
IDS Special Tax-Exempt Series Trust
IDS Massachusetts Tax-Exempt Fund
IDS Michigan Tax-Exempt Fund
IDS Minnesota Tax-Exempt Fund
IDS New York Tax-Exempt Fund
IDS Ohio Tax-Exempt Fund
Appendix B
1998 Massachusetts Tax-Exempt and Taxable Equivalent Yield Calculation
These tables will help you determine your combined federal and state taxable
yield equivalents for given rates of tax-exempt income.
STEP 1: Calculating your marginal tax rate.
Using your Taxable Income and Adjusted Gross Income figures as guides, you can
locate your Marginal Tax Rate in the table below.
First, locate your Taxable Income in a filing status and income range in the
left-hand column. Then, locate your Adjusted Gross Income at the top of the
chart. At the point where your Taxable Income line meets your Adjusted Gross
Income column, the percentage indicated is an approximation of your Marginal Tax
Rate. For example: Let's assume you are married filing jointly, your taxable
income is $138,000 and your adjusted gross income is $175,000.
Under Taxable Income married filing jointly status, $138,000 is in the
$102,300-$155,950 range. Under Adjusted Gross Income, $175,000 is in the
$124,500 to $186,800 column. The Taxable Income line and Adjusted Gross Income
column meet at 35.98%. This is the rate you'll use in Step 2.
<PAGE>
<TABLE>
<CAPTION>
Adjusted gross income*
- ------------------------------------------------------------------------------------------------
Taxable income** $0 $124,500 $186,800
Married Filing Jointly to to to OVER
$124,500(1) $186,800(2) $309,300(3) $309,300(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 0 - $ 42,350 20.06%
42,350 - 102,300 32.28 33.07%
102,300 - 155,950 35.11 35.98 37.24%
155,950 - 278,450 39.81 40.82 42.29 40.82%
278,450 + 43.19 45.92*** 44.31
- -------------------------------------------------------------------------------------------------
Taxable income** $0 $124,500
Single to to OVER
$124,500(1) $247,000(3) $247,000(2)
- -------------------------------------------------------------------------------------
$ 0 - $ 25,350 20.06%
25,350 - 61,400 32.28
61,400 - 128,100 35.11 36.61%
128,100 - 278,450 39.81 41.56 40.82%
278,450 + 43.19 44.31
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</TABLE>
*Gross income with certain adjustments before taking itemized deductions and
personal exemptions.
**Amount subject to federal income tax after itemized deduction and personal
exemptions.
***This rate is applicable only in the limited case where your adjusted gross
income is less than $309,300 and your taxable income exceeds $278,450.
(1) No Phase-out -- Assumes no phase-out of itemized deductions or personal
exemptions.
(2) Itemized Deductions Phase-out -- Assumes a phase-out of itemized
deductions and no phase-out of personal exemptions.
(3) Itemized Deductions and Personal Exemption Phase-outs -- Assumes a single
taxpayer has one personal exemption, joint taxpayers have two personal
exemptions, personal exemptions phase-out and itemized deductions
continue to phase-out.
Federal taxes are not deductible on the Massachusetts state tax return.
The federal tax brackets are based on tax rates in effect on Jan. 1, 1998. The
Massachusetts tax brackets are based on state tax rates for Part A income in
effect on Jan. 1, 1999. These rates may change if Massachusetts tax rates change
in 1999. If state tax rates change, equivalent rates may differ from those
shown.
If these assumptions do not apply to you, it will be necessary to construct your
own personalized tax equivalency table.
<PAGE>
STEP 2: Determining your combined federal and Massachusetts state taxable yield
equivalents.
Using 35.98%, you may determine that a tax-exempt yield of 5% is equivalent to
earning a taxable 7.81% yield.
<TABLE>
<CAPTION>
For these Tax-Exempt Rates:
-------------------------------------------------------------------
3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
-------------------------------------------------------------------
Marginal Tax Rates Equal the Taxable Rates shown below:
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
20.06% 3.75 4.38 5.00 5.63 6.25 6.88 7.51 8.13
32.28% 4.43 5.17 5.91 6.65 7.38 8.12 8.86 9.60
33.07% 4.48 5.23 5.98 6.72 7.47 8.22 8.96 9.71
35.11% 4.62 5.39 6.16 6.93 7.71 8.48 9.25 10.02
35.98% 4.69 5.47 6.25 7.03 7.81 8.59 9.37 10.15
36.61% 4.73 5.52 6.31 7.10 7.89 8.68 9.47 10.25
37.24% 4.78 5.58 6.37 7.17 7.97 8.76 9.56 10.36
39.81% 4.98 5.81 6.65 7.48 8.31 9.14 9.97 10.80
40.82% 5.07 5.91 6.76 7.60 8.45 9.29 10.14 10.98
41.56% 5.13 5.99 6.84 7.70 8.56 9.41 10.27 11.12
42.29% 5.20 6.06 6.93 7.80 8.66 9.53 10.40 11.26
43.19% 5.28 6.16 7.04 7.92 8.80 9.68 10.56 11.44
44.31% 5.39 6.28 7.18 8.08 8.98 9.88 10.77 11.67
45.92% 5.55 6.47 7.40 8.32 9.25 10.17 11.09 12.02
- -------------------------------------------------------------------------------------------------------
</TABLE>
S-6328-21 A (10/98)
Valid until next Prospectus update
*Destroy Aug. 29, 1999
