A 1099-INT is an IRS tax form that reports interest income you earned during the year. Banks and financial institutions send it by January 31 when you earned $10 or more in interest. All interest income is taxable as ordinary income — even if you never received a 1099-INT. Here is what the form means, how to read it, and how to report it correctly.
For a full overview of 1099 forms, see the 1099 Tax Guide.
What Is Form 1099-INT?
Form 1099-INT (Interest Income) is how financial institutions report taxable interest they paid to you during the tax year. The IRS receives a copy simultaneously — meaning the agency already knows about this income before you file. Any discrepancy between what you report and what was filed triggers an IRS notice.
Who must send a 1099-INT:
- Banks and credit unions that paid ≥ $10 in interest
- Brokerage firms that paid ≥ $10 in interest (bonds, CDs, money market)
- The US Treasury (for I Bonds and Treasury securities)
- Mortgage servicers who received ≥ $600 in interest from you (they send 1098, not 1099-INT)
Deadline: Financial institutions must send 1099-INTs by January 31 of the year following the tax year.
How to Read Form 1099-INT — Box by Box
| Box | What It Reports | Tax Treatment |
|---|---|---|
| Box 1 | Regular taxable interest | Ordinary income; federal + state tax |
| Box 2 | Early withdrawal penalty | Deductible on Schedule 1 (reduces income) |
| Box 3 | US Savings Bond / Treasury interest | Federal tax only; state/local exempt |
| Box 4 | Federal income tax withheld | Credit on your return (if backup withholding applied) |
| Box 5 | Investment expenses | No longer deductible (eliminated by TCJA 2017) |
| Box 6 | Foreign tax paid | Deductible or credit on Form 1116 |
| Box 7 | Foreign country where paid | Informational |
| Box 8 | Tax-exempt interest (municipal bonds) | Not federally taxable; affects MAGI |
| Box 9 | Specified private activity bond interest | AMT preference item |
| Box 10 | Market discount | Generally ordinary income when bond sold |
| Box 11 | Bond premium | Can offset interest income if elected |
The box you will use most: Box 1 — regular interest income. This flows to Form 1040 line 2b (or Schedule B if your total interest exceeds $1,500).
Worked Example: Reporting a 1099-INT
Scenario: You have a high-yield savings account at an online bank. In 2025, the account paid you $480 in interest. You receive a 1099-INT showing $480 in Box 1.
Step 1: If you have interest from multiple sources totaling more than $1,500, file Schedule B and list each payer and amount. If total is $1,500 or under, you can enter it directly on Form 1040 Line 2b.
Step 2: The $480 adds to your taxable income. If you are in the 22% federal bracket, you owe $480 × 22% = $105.60 in federal tax on this interest.
Step 3: Most states also tax interest income — check your state’s rules.
Common Situations
High-Yield Savings Accounts
With online HYSA rates at 4–5% in recent years, many savers received substantial interest income. A $50,000 account at 4.5% produces $2,250 in interest — a 1099-INT will be issued and Schedule B is required.
Certificates of Deposit (CDs)
CD interest is taxable in the year it is credited to you, even on multi-year CDs where you haven’t withdrawn anything. If you opened a 2-year CD in 2024 that credits interest annually, you received a 1099-INT for the 2025 accrual even if you didn’t touch the account.
US Treasury Bills, Notes, and Bonds
Treasury interest appears in Box 3. It is subject to federal income tax but exempt from state and local income tax — a meaningful benefit in high-tax states. New York City residents, for example, avoid both NY state and NYC income tax on Treasury interest.
I Bonds
I Bond interest is reported when you redeem the bond, not as it accrues. At redemption, the issuing institution or Treasury Direct sends a 1099-INT. I Bond interest is also state-tax-exempt.
Municipal Bond Interest
Municipal bond interest appears in Box 8 and is not subject to federal income tax. However, it does count in the calculation of modified adjusted gross income (MAGI), which can affect Medicare premium surcharges (IRMAA) and the taxability of Social Security benefits.
What If You Did Not Receive a 1099-INT?
If a financial institution paid you less than $10 in interest, they are not required to send a 1099-INT. But you are still required to report the income. Common situations:
- New account opened late in the year
- Low-balance account at a credit union
- Peer-to-peer lending interest under $10
Report the income on Schedule B or Form 1040 Line 2b with the payer’s name and amount. The IRS can cross-reference your return against account records.
Early Withdrawal Penalty (Box 2)
If you broke a CD early and paid a penalty, the penalty amount appears in Box 2. This is deductible — you can subtract it from your income on Schedule 1 (Part II, Line 18). This is one of the few above-the-line deductions still available without itemizing.
Example: You earned $600 interest on a CD (Box 1) but paid a $150 early withdrawal penalty (Box 2). Your net taxable interest is $450. Report $600 on Schedule B, then deduct $150 on Schedule 1.
Foreign Tax Credit (Box 6)
If you owned foreign bonds or foreign-currency accounts that withheld foreign taxes, Box 6 shows that amount. You can either deduct it as an itemized deduction or take a Foreign Tax Credit on Form 1116, which directly reduces your US tax dollar-for-dollar. The credit is usually more valuable than the deduction.
Key Takeaways
- 1099-INTs are issued by January 31 for any account that paid $10 or more in interest
- All interest income is taxable as ordinary income at your marginal federal rate, plus state taxes (except Box 3 Treasury interest and Box 8 municipal interest)
- Report interest on Schedule B if total exceeds $1,500; otherwise directly on Form 1040 Line 2b
- Early withdrawal penalties in Box 2 are deductible above-the-line
- You must report interest income even if no 1099-INT was issued — the IRS matches payer records to returns
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