N.Y. New, New York Bond Act § 4
Bonds issued pursuant to this act may be issued as taxable or tax-exempt bonds for purposes of the federal internal revenue code and regulations thereunder. All actions taken pursuant to this act shall be reviewed for consistency with provisions of the federal internal revenue code and regulations thereunder, in accordance with procedures established in connection with the issuance of any bonds pursuant to this act which are intended to be federally tax exempt to preserve the federal tax exempt status of such bonds. Any bonds issued pursuant to this act together with the income therefrom shall be exempt from state and local taxation except for transfer and estate taxes. The state covenants with the purchasers and with all subsequent holders and transferees of bonds issued pursuant to this act, in consideration of the acceptance of and payment for the bonds, that the bonds issued pursuant to this act and the income therefrom shall be free from such taxation, as aforestated herein.
N.Y. New, New York Bond Act Law § 4