If you earned interest from a bank account, certificate of deposit, Treasury bond, I-Bond, or money market fund in 2025, you will receive Form 1099-INT. With interest rates remaining elevated through 2025, millions of Americans who previously received negligible interest on their savings are now seeing meaningful taxable income — and many are encountering Form 1099-INT for the first time.
This guide explains every box on Form 1099-INT, how different types of interest are taxed, when you must file Schedule B, and the 2026 updates most relevant to savers and investors.
Already have your 1099-INT? Download the free fillable 1099-INT form PDF to see exactly what your financial institution reported to the IRS.
Quick Summary
| Aspect | Details |
|---|---|
| Form purpose | Reports interest income paid to you |
| Reporting threshold | $10 or more in interest (most payers) |
| Who sends it | Banks, credit unions, brokerages, Treasury Direct, issuers |
| Deadline to receive | January 31 of the following year |
| Where to report | Schedule B + Form 1040, Line 2b |
| Schedule B required | When total taxable interest exceeds $1,500 |
| Tax rate | Ordinary income rates (same as wages) |
| Key 2026 update | Elevated rate environment — more taxpayers crossing $1,500 Schedule B threshold |
What’s Important for 2026 Filing
High-Yield Savings and Money Market Accounts
Interest rates in 2024–2025 remained significantly above historical averages, with high-yield savings accounts (HYSAs) at online banks offering 4.0%–5.0% APY and money market accounts at similar levels. A $25,000 balance at 4.5% generated over $1,100 in taxable interest — well within range of the $1,500 Schedule B threshold when combined with other interest income.
What this means for 2026 filers:
- More taxpayers are crossing the $1,500 threshold that requires filing Schedule B
- Some taxpayers receiving a 1099-INT for the first time due to elevated rates
- Treasury bill and T-note interest continues to be federally taxable but state and local tax-exempt
- I-Bond holders who redeemed in 2025 must report all accrued interest — sometimes covering multiple years of accumulation
I-Bond Interest Reporting
I-Bond interest accrues but is not taxable until redemption (or final maturity at 30 years). If you redeemed I-Bonds purchased during the 2021–2022 surge, the full accumulated interest since purchase date appears on your 2025 Form 1099-INT. This can create an unexpectedly large interest income figure — sometimes $2,000–$5,000+ on a single redemption.
Options for I-Bond interest:
- Report all at redemption (default — most common)
- Elect to report interest annually (election must be made on your original return and applies to all EE/I Bonds)
Backup Withholding
If you provided an incorrect TIN (or failed to provide one) to your financial institution, they are required to withhold 24% of your interest payments. This appears in Box 4. The withheld amount is a tax payment — report it on Form 1040 Line 25c to receive credit.
What Is Form 1099-INT?
Form 1099-INT (Interest Income) is an information return that financial institutions, government agencies, and bond issuers send to you (and the IRS) when they pay you $10 or more in interest during the year. It covers the broadest range of interest-generating instruments of any tax form.
Who Sends Form 1099-INT?
| Payer Type | Examples |
|---|---|
| Banks and credit unions | Chase, Bank of America, Ally, Marcus, SoFi |
| Brokerages | Fidelity, Vanguard, Schwab, TD Ameritrade |
| U.S. Treasury (via Treasury Direct) | I-Bonds, EE Bonds, T-Bills, T-Notes, T-Bonds |
| Mortgage servicers | If you received a mortgage interest refund or escrow credit |
| Insurance companies | Interest on insurance proceeds |
| Bond issuers | Corporate bonds, municipal bonds, agency bonds |
| Peer-to-peer lenders | LendingClub, Prosper (interest from loans) |
Who Receives Form 1099-INT?
You Receive a 1099-INT If:
- You earned $10 or more in interest from a single payer during the year
- You had backup withholding applied (regardless of the interest amount)
- You received a tax-exempt interest payment of $10 or more (shown in Box 8)
- You redeemed U.S. Savings Bonds (I-Bonds, EE Bonds) during the year
You Won’t Receive a 1099-INT If:
- Total interest from a single payer was under $10 (not required — but still taxable)
- Interest was earned inside a tax-deferred account (IRA, 401(k), HSA — no 1099-INT issued)
- You received interest from Roth IRA earnings (not a distribution of interest)
You May Receive Multiple 1099-INTs
Each payer sends a separate form. You could receive 1099-INTs from your bank, brokerage, Treasury Direct, and a credit union — all in the same year. Add all taxable interest (Box 1 + Box 3) together and report the total on Schedule B.
Form 1099-INT Box-by-Box Guide
Box 1 — Interest Income
The most important box. Total ordinary interest paid to you, including:
- Savings account interest
- Checking account interest
- CD (certificate of deposit) interest
- Money market account interest
- Corporate bond interest
- Mortgage escrow interest refunds
This amount is fully taxable as ordinary income. Report it on Schedule B, Part I, and carry the total to Form 1040, Line 2b.
Box 2 — Early Withdrawal Penalty
If you cashed out a CD before its maturity date, the bank deducted an early withdrawal penalty. The penalty is shown here and is deductible — even though it reduces Box 1, you report the gross Box 1 amount as income and then deduct Box 2 on Form 1040, Schedule 1, Line 18 (“Penalty on early withdrawal of savings”).
Example: CD pays $800 interest but charges $150 early withdrawal penalty. Box 1 = $800, Box 2 = $150. Report $800 as income, deduct $150 above the line.
Box 3 — Interest on U.S. Savings Bonds and Treasury Obligations
Interest from:
- I-Bonds and EE Bonds (at redemption or maturity)
- Treasury bills (T-bills)
- Treasury notes (T-notes)
- Treasury bonds (T-bonds)
- TIPS (Treasury Inflation-Protected Securities) interest and inflation adjustments
Key tax treatment: Box 3 interest is federally taxable but exempt from state and local income taxes. Report on Schedule B. When filing your state return, subtract Box 3 from your state taxable income.
Box 4 — Federal Income Tax Withheld
Backup withholding at 24% of interest payments. This applies if:
- You did not provide a TIN (Social Security Number or EIN) to the payer
- The IRS notified the payer that your TIN is incorrect
- You were notified by the IRS that you are subject to backup withholding
Report Box 4 on Form 1040, Line 25c as a federal tax payment. It reduces your tax owed (or increases your refund) dollar-for-dollar.
To stop backup withholding: Submit Form W-9 with your correct TIN to the financial institution.
Box 5 — Investment Expenses
This box was rendered effectively obsolete by the Tax Cuts and Jobs Act (TCJA) of 2017, which eliminated the deduction for investment expenses (previously a miscellaneous itemized deduction subject to 2% AGI floor) through 2025. For most filers, Box 5 will be blank or zero. Do not deduct this amount on your 2025 return.
Box 6 — Foreign Tax Paid
If you own foreign bonds or foreign-currency accounts that paid interest subject to foreign withholding tax, the amount withheld by a foreign government appears here. You can claim this as either:
- Foreign Tax Credit (Form 1116) — reduces your U.S. tax dollar-for-dollar (generally more valuable)
- Itemized deduction on Schedule A — reduces taxable income
For small amounts (generally $300 or less for single, $600 or less for married filing jointly), you can claim the credit directly on Form 1040 without filing Form 1116.
Box 7 — Foreign Country or U.S. Possession
The name of the foreign country or U.S. territory that imposed the foreign tax in Box 6. Used when filing Form 1116.
Box 8 — Tax-Exempt Interest
Interest that is exempt from federal income tax, primarily:
- Municipal bond interest (interest from bonds issued by states, cities, counties)
- Certain qualifying private activity bonds
Important: Even though Box 8 interest is federally tax-exempt, it may be:
- Taxable at the state level (each state has different rules)
- Included in the calculation for Alternative Minimum Tax (AMT) if it’s from private activity bonds
- Counted in the income test for Social Security benefit taxation
Report Box 8 on Form 1040 Line 2a (tax-exempt interest). It does not go on Schedule B Part I — it’s informational for the IRS.
Box 9 — Specified Private Activity Bond Interest
Subset of Box 8 showing the portion subject to Alternative Minimum Tax (AMT). If you are subject to AMT, report Box 9 on Form 6251. This typically applies to higher-income taxpayers with significant municipal bond holdings.
Box 10 — Market Discount
If you purchased a bond at a discount from its face value (below par), the discount that has accrued since purchase may be treated as ordinary income rather than capital gain. This is complex — consult IRS Publication 550 or a tax advisor if Box 10 contains an amount.
Box 11 — Bond Premium
If you purchased a taxable bond at a premium (above face value), you can elect to amortize the premium over the life of the bond, which reduces your taxable interest income annually. Box 11 shows the premium amortized this year.
How it works: If you paid $1,050 for a $1,000 bond, you paid a $50 premium. Over the bond’s remaining life, you can deduct the amortized premium against Box 1 interest income each year. This is reported on Schedule B with a notation.
Box 12 — Bond Premium on Treasury Obligations
Same as Box 11 but specifically for Treasury securities (T-bills, T-notes, T-bonds, TIPS). The amortized premium reduces Box 3 income.
Box 13 — Bond Premium on Tax-Exempt Bond
Premium amortized on tax-exempt (municipal) bonds. Reduces Box 8 tax-exempt interest — but since Box 8 is already tax-free, this primarily affects cost basis calculations.
Box 14 — Tax-Exempt and Tax Credit Bond CUSIP Number
The CUSIP identifier for the tax-exempt or tax credit bond. Informational — used to identify specific bonds for tax purposes.
Boxes 15–17 — State Tax Information
| Box | Contents |
|---|---|
| Box 15 | State identification number of the payer |
| Box 16 | State tax withheld |
| Box 17 | State income (if different from federal) |
Report on your state return as required by your state’s tax law.
How to Report 1099-INT on Your Tax Return
Step 1: Gather All 1099-INT Forms
Collect every 1099-INT received. Financial institutions must mail them by January 31. For Treasury Direct (I-Bonds, T-bills), download your 1099-INT from TreasuryDirect.gov — they are not mailed.
Step 2: Determine Which Lines Apply
| Box | Where to Report |
|---|---|
| Box 1 | Schedule B, Part I → Form 1040, Line 2b |
| Box 2 | Form 1040, Schedule 1, Line 18 (deduction) |
| Box 3 | Schedule B, Part I (note: state-exempt) → Form 1040, Line 2b |
| Box 4 | Form 1040, Line 25c (tax payment credit) |
| Box 6 | Form 1116 or Form 1040 Schedule 3, Line 1 |
| Box 8 | Form 1040, Line 2a (tax-exempt interest only) |
| Box 9 | Form 6251 (AMT calculation) |
Step 3: Do You Need Schedule B?
You must file Schedule B if:
- Total taxable interest income (Box 1 + Box 3 from all 1099-INTs) exceeds $1,500
- You had a financial interest in or signature authority over a foreign bank account
- You received a distribution from a foreign trust
You don’t need Schedule B if:
- Total interest is $1,500 or less (report directly on Form 1040, Line 2b)
- All interest is from domestic sources and well below the threshold
Step 4: Complete Schedule B Part I (If Required)
List each payer name and the Box 1 + Box 3 amount from each 1099-INT. Sum them. The total flows to Form 1040, Line 2b.
Step 5: Note State Tax Exemption for Treasury Interest
If you have Box 3 income (Treasury/I-Bond interest), subtract that amount from your state taxable income. Most state returns have a specific line for this — look for “U.S. obligations interest” or “federal interest exempt from state tax.”
Special Situations
Treasury Direct — No Paper Mail
TreasuryDirect does not mail 1099-INT forms. Log into your TreasuryDirect.gov account, go to Manage Direct → 1099 Tax Forms, and download your current-year form. This is a common reason taxpayers miss reporting Treasury interest.
Joint Accounts
If you hold an account jointly, the 1099-INT is issued in the primary account holder’s SSN. The primary holder reports all interest on their return — or the co-owners can split the income and each report their share (with the primary holder filing a nominee return, Form 1099-INT, for the co-owner’s share).
Seller-Financed Mortgages
If you sold real estate and the buyer is paying you interest on a seller-financed loan, you must self-report that interest income even if you don’t receive a 1099-INT. The income goes on Schedule B.
Accrued Interest on Bond Purchases
When you buy a bond between coupon dates, you pay the seller for accrued interest. At the next coupon payment, you receive the full coupon (including the portion accrued before you owned the bond). Your 1099-INT will show the full amount. You can subtract the accrued interest you paid at purchase from Box 1 on Schedule B with a notation “accrued interest.”
Common Mistakes to Avoid
| Mistake | Consequence | Fix |
|---|---|---|
| Not downloading Treasury Direct 1099-INT | Unreported income — IRS matching notice | Log into TreasuryDirect.gov annually in January |
| Forgetting interest under $10 | Technically taxable even without 1099-INT | Report all interest income |
| Not deducting Box 2 early withdrawal penalty | Overpaying taxes | Deduct on Schedule 1, Line 18 |
| Reporting Box 8 (tax-exempt) as taxable | Overpaying taxes | Box 8 goes on Form 1040 Line 2a, not Line 2b |
| Missing Schedule B when over $1,500 | IRS math error notice | File Schedule B if combined interest exceeds $1,500 |
| Not claiming Box 6 foreign tax credit | Missing tax savings | Claim on Form 1116 or directly on Schedule 3 |
| Paying state tax on Treasury interest | Overpaying state taxes | Subtract Box 3 from state taxable income |
| Not reporting I-Bond interest at redemption | Underreported income | All accrued interest is taxable in year of redemption |
Frequently Asked Questions
Do I have to report interest income under $10?
Yes. The $10 threshold determines when a financial institution is required to issue a 1099-INT — not when income is taxable. Any interest you earned, even $1, is technically taxable and should be reported. In practice, the IRS rarely pursues small amounts not reflected on a 1099-INT, but the legal obligation exists.
Is interest from a high-yield savings account taxed differently than a regular savings account?
No. All savings account interest — whether from a 0.01% APY traditional account or a 5.0% HYSA — is taxed identically as ordinary income at your marginal federal income tax rate. There is no preferential rate for bank interest the way there is for qualified dividends or long-term capital gains.
Is Treasury interest exempt from state taxes?
Yes. Interest on U.S. Treasury securities (T-bills, T-notes, T-bonds, I-Bonds, EE Bonds) is exempt from state and local income taxes under federal law. It is, however, fully subject to federal income tax. Box 3 on your 1099-INT contains this amount — subtract it from your state return’s taxable income.
I redeemed I-Bonds — how do I report the interest?
The financial institution (TreasuryDirect) will issue a 1099-INT showing the total accrued interest in Box 3. Report it as ordinary income on Schedule B in the year you redeemed. If you’ve been electing to report annually (an uncommon election), only the current year’s accrual appears.
What if my bank sent me a corrected 1099-INT?
File your taxes using the corrected (most recent) form. If you already filed and then received a corrected 1099-INT, you may need to file Form 1040-X (amended return) if the correction materially changes your tax liability.
Does interest in my IRA or 401(k) get a 1099-INT?
No. Interest earned inside tax-deferred retirement accounts (traditional IRA, 401(k), 403(b)) is not reported on a 1099-INT because it isn’t currently taxable. You pay taxes when you withdraw from these accounts — those withdrawals are reported on Form 1099-R, not 1099-INT.
What is the tax rate on interest income?
Interest income is taxed as ordinary income at your marginal federal income tax rate — the same rate as wages, salary, and self-employment income. For 2025, the brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. There is no preferential 0%/15%/20% capital gains rate for interest. High earners (over $200,000 single / $250,000 married) also owe an additional 3.8% Net Investment Income Tax (NIIT) on interest income.
1099-INT Filing Checklist
Before filing your return:
- Collect all 1099-INT forms from banks, brokerages, and credit unions
- Download Treasury Direct 1099-INT from TreasuryDirect.gov (not mailed)
- Add up all Box 1 amounts across all forms
- Add all Box 3 amounts (Treasury/I-Bond interest)
- Determine if total taxable interest exceeds $1,500 → file Schedule B if so
- Note any Box 2 early withdrawal penalties → deduct on Schedule 1
- Check Box 4 for backup withholding → claim as tax payment on Line 25c
- Identify Box 8 tax-exempt interest → report on Form 1040 Line 2a only
- Check Box 6 for foreign tax paid → claim credit on Form 1116 or Schedule 3
- Subtract Box 3 from your state taxable income (Treasury interest is state-exempt)
Best Practices for Interest Income
- Set up Treasury Direct alerts — log in each January and download your 1099-INT before filing
- Separate savings goals — HYSA interest is taxable; consider I-Bonds for tax deferral if you won’t need funds for 12+ months
- Track CD maturity dates — early withdrawal penalties are deductible but disruptive; plan maturities around your needs
- Consider municipal bonds for high-bracket taxpayers — tax-exempt interest from munis can be more valuable than higher-yielding taxable bonds
- Make quarterly estimated payments — if significant interest income is expected, pay quarterly to avoid underpayment penalties
- Keep 1099-INT copies — retain for at least 3 years (7 years is safer) with your tax records
Conclusion
Form 1099-INT is one of the most widely received tax documents in the U.S. — virtually anyone with a bank account, brokerage account, or savings bond will encounter it. With interest rates staying elevated through 2025, the form carries more weight than in prior low-rate years.
Key takeaways:
- Box 1 = taxable interest; Box 8 = tax-exempt interest — don’t mix them up
- Treasury interest (Box 3) is federally taxable but state-exempt
- Schedule B is required when total interest exceeds $1,500
- I-Bond interest is all taxable in the year of redemption
- Download Treasury Direct 1099-INT from TreasuryDirect.gov — it’s not mailed
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Last updated: March 16, 2026 Reviewed by David Park, Certified Financial Planner & Tax Advisor Updated to reflect 2025 tax year interest rate environment and current IRS reporting rules
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