The following phrase (or its substantial equivalent) in other codes or statutes does not exempt the gain or loss from the sale or transfer of bonds from the provisions of this part:
“The issuance, transfer and interest income earned on any bonds issued by an agency (state or local) under this article (chapter, section, etc.) is exempt from taxation of every kind by any state or local entity.”
Source:
Section 17133.5, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=17133.5..