Interest on obligations of the United States and of the states and their political subdivisions

Interest received from obligations of the United States or of its possessions and from this state or its political subdivisions is not subject to income tax imposed by this state. Interest received from obligations of any other state or its political subdivisions is subject to income tax imposed by this state for a taxpayer who files an individual income tax return form ND-2 or form 37, but is not subject to income tax imposed by this state for a taxpayer who files an individual income tax return form ND-1 or form 37-S. "Obligations" as used in this section means only those obligations, such as municipal or other government bonds, arising out of the borrowing power of the federal government or a state government or its political subdivisions.