The IRS threshold for reporting interest income

You do not have to report checking account interest under $10 on your federal tax return. The IRS does not require you to file a Form 1099-INT (the document banks send for interest income) or report the interest on your tax return if the total is less than $10 for the year.

However, this does not mean the interest is tax-free. If your bank paid you interest, that income technically belongs on your return even if it falls below the reporting threshold. The practical reality is that the IRS does not pursue people for unreported interest under $10, and most tax software will not flag it as missing.

The $10 threshold has been in place for decades and does not change year to year. It applies only to interest income reported on Form 1099-INT, not to other types of income or to state taxes, which may have different rules.

Key Takeaways

  • Banks do not send a Form 1099-INT if your interest income is under $10 for the year, and the IRS does not require you to report it on your federal return.
  • Interest under $10 is still technically taxable income, but the IRS does not enforce reporting at that level.
  • Some states have their own thresholds for reporting interest, so check your state's rules if you file a state return.
  • If you have multiple accounts or multiple banks, add up all the interest across all accounts to see whether you hit the $10 threshold.

How banks report interest to the IRS

Your bank tracks all interest paid to your checking account during the calendar year. On January 31 of the following year, the bank sends you a Form 1099-INT if the total interest reaches $10 or more. The bank also sends a copy to the IRS.

If your interest is under $10, the bank does not issue a 1099-INT at all. You will not receive a form, and the IRS will not receive one either. This is the source of the common misunderstanding that interest under $10 is not taxable—it is simply not reported through the standard mechanism.

You should still keep records of any interest your bank paid you, even if no form arrives. Your monthly statements show the interest deposits, and those are your proof of what you earned.

State tax requirements may differ

While the federal threshold is $10, some states have lower thresholds or different rules for reporting interest income. A few states do not tax interest income at all, while others require reporting even small amounts.

If you file a state income tax return, check your state's Department of Revenue website or your state tax form instructions. States like New York, California, and Massachusetts have their own reporting rules that may not match the federal $10 threshold. Some states follow the federal rule; others do not.

The safest approach is to report all interest income on both your federal and state returns, regardless of amount. This avoids any mismatch between what you report to the state and what the IRS has on file.

What happens if you have interest from multiple accounts

The $10 threshold applies to your total interest income from all sources reported on Form 1099-INT, not to each account separately. If you have a checking account at two different banks and one pays $6 in interest and the other pays $5, your total is $11—above the threshold.

In this case, each bank may or may not send you a 1099-INT depending on their own records. However, if the combined total reaches $10 or more, you should report it on your return. The IRS will eventually see the forms from both banks and will expect to see the combined amount on your return.

Add up all interest from checking accounts, savings accounts, money market accounts, and any other interest-bearing accounts you own when calculating whether you have crossed the $10 line.

Interest rates and how much you actually earn

Most traditional checking accounts pay very little interest—often 0.01% or less per year. On a $5,000 balance, that works out to about 50 cents per year. You would need a much larger balance or a higher-rate account to generate $10 in annual interest.

High-yield checking accounts, offered by online banks and some credit unions, pay significantly more—sometimes 4% to 5% or higher. On a $2,500 balance at 4%, you would earn about $100 per year and would definitely cross the $10 threshold.

If you are trying to stay under $10 to avoid reporting, remember that the interest is still income and still taxable. The reporting threshold is a convenience rule, not a tax break. Reporting the interest honestly is the right approach even if you are not required to.

What to do if you receive a 1099-INT

If your bank sends you a Form 1099-INT, you must report that interest on your federal tax return, regardless of the amount. The form will show the interest paid in Box 1. Enter this amount on Schedule 1 (Form 1040), line 2b, or on the appropriate line of your tax software.

Keep the 1099-INT with your tax records for at least three years. If the IRS ever questions your return, you will need to show that you reported the income the bank reported to them.

If you receive a 1099-INT but believe the amount is wrong, contact your bank immediately. The bank can issue a corrected form (a 1099-INT marked "CORRECTED") if there was an error.

Frequently Asked Questions

Do I have to report interest if I only earned $5 this year?

No, you do not have to report interest under $10 on your federal return, and your bank will not send you a 1099-INT. However, check your state's rules, as some states have lower thresholds or different requirements. The interest is still technically taxable income, but the IRS does not enforce reporting at that level.

What if my bank sends me a 1099-INT for $8?

If your bank issued a 1099-INT, you must report it on your return, even though it is under $10. The bank sent a copy to the IRS, so the IRS expects to see it on your return. Report the amount on Schedule 1, line 2b, or follow your tax software's prompts for interest income.

Do I add up interest from all my accounts to see if I hit $10?

Yes. The $10 threshold applies to your total interest income from all accounts combined, not to each account separately. If you have multiple checking or savings accounts, add up all the interest before deciding whether you need to report it.

Is interest from a checking account taxed differently than interest from a savings account?

No. Interest is interest, regardless of the account type. All interest income is reported on Form 1099-INT and taxed as ordinary income at your regular tax rate. The $10 threshold applies to all interest income combined.

What if I do not receive a 1099-INT but I know I earned interest?

If your interest was under $10, your bank is not required to send a form. You can still report the interest on your return if you want to be thorough, but you are not required to if the total is under $10. Check your bank statements to confirm the amount you earned.