What the de minimis rule means for your checking account
The de minimis rule is a federal regulation that lets banks skip reporting interest payments on your checking account if the amount is very small. "De minimis" is Latin for "about minimal things" — the rule exists because the paperwork cost of tracking tiny interest amounts would exceed the value of the interest itself.
For most checking accounts, this rule sets a threshold: if your account earns less than $10 in interest during a calendar year, your bank does not have to report it to you on a Form 1099-INT or to the IRS. The $10 threshold has been in place since 1994 and does not change year to year.
This matters because it affects your tax filing. If your account falls below the threshold, you will not receive a 1099-INT form, and you are not required to report that interest income on your tax return. However, if you do earn interest above $10, the bank must report it, and you must include it in your taxable income.
Key Takeaways
- Banks do not have to report interest income under $10 per calendar year, and you do not have to report it on your taxes.
- The $10 threshold applies to the total interest earned in a single calendar year, not per month or per deposit.
- If your account earns $10 or more in interest, your bank will send you a 1099-INT form by January 31 of the following year.
- Interest that falls below the de minimis threshold is still technically taxable income, but the IRS does not require you to report amounts under $10.
How the $10 threshold works in practice
The de minimis rule applies to the total interest your account generates during one calendar year — January 1 through December 31. If you earn $9.50 in interest over twelve months, your bank will not issue a 1099-INT. If you earn $10.01, they must issue one.
This threshold is per account type at each bank, not per account overall. If you have a checking account and a savings account at the same bank, the interest from each is tracked separately. Interest from accounts at different banks is also tracked separately. So you could have $9 in interest from a checking account at Bank A and $9 in interest from a savings account at Bank B, and neither would trigger a 1099-INT.
The rule does not apply to other types of income. If your checking account is linked to a brokerage or investment feature that generates dividends or capital gains, those follow different reporting rules and may be reported even if the amount is small.
When you will receive a 1099-INT form
If your checking account earns $10 or more in interest during a calendar year, your bank must send you a Form 1099-INT by January 31 of the following year. This form shows the total interest paid to you and goes to both you and the IRS.
You will receive the form even if the interest amount is only slightly above $10. There is no upper limit to the de minimis rule — once you cross the $10 threshold, the bank reports everything, no matter how much you earned.
If you have multiple accounts at the same bank that each earn interest, you may receive separate 1099-INT forms for each account, or the bank may combine them into one form. Check your bank's documentation or contact them directly to understand how they report interest across multiple accounts.
Why most checking accounts stay below the threshold
Most standard checking accounts earn very little interest or none at all. Banks typically offer checking accounts with 0% annual percentage yield (APY) or rates below 0.10% APY. At those rates, you would need a balance of at least $10,000 to $100,000 to generate $10 in annual interest.
High-yield checking accounts do exist and can pay 4% to 5% APY or higher, but they usually require a minimum balance of $500 to $25,000 and may have other conditions. Even with a high-yield account, if your balance is modest, you may still fall below the $10 threshold.
For example, a $500 balance in a 4% APY account would generate about $20 in annual interest, crossing the threshold. A $500 balance in a 0.01% APY account would generate about $0.05, staying well below it.
What to do if you receive a 1099-INT
If your bank sends you a 1099-INT, you must report the interest income on your tax return. The form will show the amount in Box 1 (interest income). You report this on Schedule B (Interest and Ordinary Dividends) if you file Form 1040, or on the appropriate line of your state tax return if you file one.
Keep your 1099-INT with your tax records. The IRS receives a copy from your bank, so your return should match the amount shown on the form. If the amount on the form is incorrect, contact your bank immediately to request a corrected form (a 1099-INT with "CORRECTED" marked on it).
If you did not receive a 1099-INT but your bank paid you interest, check your account statements. The interest should appear as a deposit or credit. If you earned $10 or more and did not receive a form by February 15, contact your bank to request one.
Interest income below $10 and your taxes
Interest that falls below the $10 de minimis threshold is still technically taxable income under federal tax law. However, because the IRS does not require banks to report it and you are not required to report it on your return, most people do not include it.
If you want to report interest below $10 voluntarily, you can. Some people do this if they are filing a return anyway and want to be thorough. You would add the amount to your interest income line on Schedule B or your state return.
The IRS is unlikely to audit you over unreported interest under $10, but the rule exists for administrative convenience, not as a tax break. If you are uncertain whether to report a small amount, consult a tax professional or contact the IRS directly.
How the de minimis rule differs by state
The $10 de minimis threshold is a federal rule set by the IRS. Most states follow the same threshold for state income tax purposes, but a few states have different rules or do not recognize the de minimis exception at all.
If you live in a state with income tax, check your state's tax agency website or contact them to confirm whether they follow the federal $10 threshold. Some states may require you to report all interest income regardless of amount, while others may have a higher or lower threshold.
If you file taxes in multiple states (for example, if you work in one state and live in another), each state's rules apply to the income you earned in that state. Your bank will send you a single 1099-INT, but you may need to allocate the interest between states on your returns.
Frequently Asked Questions
Do I have to report interest under $10 on my taxes?
No. The IRS does not require you to report interest income below $10 per calendar year. Your bank will not send you a 1099-INT, and you are not required to include it on your tax return. However, you may report it voluntarily if you choose.
If I have two checking accounts at the same bank, do they count together toward the $10 threshold?
No. The de minimis rule applies to each account separately. If one account earns $6 and another earns $5, neither triggers a 1099-INT. If one account earns $10 and another earns $1, only the first account will generate a form.
What if my bank made a mistake and reported interest below $10 on a 1099-INT?
Contact your bank and ask them to issue a corrected 1099-INT. Banks are not required to report interest below $10, so if they did, it may be an error. Keep documentation of your request in case the IRS questions the discrepancy.
Does the de minimis rule apply to savings accounts or money market accounts?
Yes. The $10 threshold applies to all types of deposit accounts — checking, savings, money market, and certificates of deposit. Each account is tracked separately, and the rule works the same way across all account types.
If I close my account mid-year, does the interest I earned still count toward the $10 threshold?
Yes. Interest is counted based on the calendar year, not on how long the account is open. If you close an account in June after earning $8 in interest, and then open a new account at the same bank and earn $3 more by December, the total is $11 and your bank must issue a 1099-INT for the year.