Updated October 18, 2026. Quick answer: Lines 1 to 4 are Part I of Schedule B, the interest section. You list each payer of taxable interest on line 1, add the amounts on line 2, subtract any savings bond interest you exclude on line 3, and carry the result from line 4 to Form 1040 line 2b. The amounts usually come from the Forms 1099-INT or 1099-OID you received.
What lines 1 to 4 ask for
Part I is a short column. Line 1 is a list: “List name of payer.” Line 2 is “Add the amounts on line 1”. Line 3 is “Excludable interest on series EE and I U.S. savings bonds issued after 1989.” with the instruction “Attach Form 8815”. Line 4 is “Subtract line 3 from line 2.” The wider Schedule B is explained on the Schedule B (Form 1040) page.
Where the number comes from
For line 1, the instructions say “Report on line 1 all of your taxable interest.” They add “Taxable interest generally should be shown on your Forms 1099-INT, Forms 1099-OID, or substitute statements.” Box 1 of the Form 1099-INT is covered on the Form 1099-INT box 1 page. The instructions also say “List each payer’s name and the amount.” The schedule’s own note gives the brokerage rule: “list the firm’s name as the payer and enter the total interest shown on that form.”
Bond interest is part of line 1 too. The instructions say “Include interest from series EE, H, HH, and I U.S. savings bonds.” If more than one payer fits in an entry space, the instructions say you can “list more than one payer on each entry space for lines 1 and 5, but be sure to clearly show the amount paid next to each payer’s name.”
Tax-exempt interest stays off line 1
On line 1 the instructions say “Don’t report on line 1 any” tax-exempt interest. For tax-exempt interest, the instructions say “each payer should send you a Form 1099-INT or a Form 1099-OID.” Where the amount goes instead is stated as “Enter the total on line 2a of your Form 1040 or 1040-SR.” Box 8 of the Form 1099-INT is explained on the tax-exempt interest box 8 page, and lines 2a and 2b of the return are on the Form 1040 lines 2a and 2b page.
Seller-financed mortgage interest comes first
If you sold property and carried the financing, the instructions say “If you sold your home or other property and the buyer used the property as a personal residence, list first any interest the buyer paid you on a mortgage or other form of seller financing.” They add “Be sure to show the buyer’s name, address, and SSN.” The cost of leaving it out is stated as “If you don’t show the buyer’s name, address, and SSN, or let the buyer know your SSN, you may have to pay a $50 penalty.”
Nominee interest and adjustments
Sometimes a Form 1099-INT shows interest that is not yours. The instructions say “If you received a Form 1099-INT that includes interest you received as a nominee (that is, in your name, but the interest actually belongs to someone else), report the total on line 1.” The next steps are “Under your last entry on line 1, put a subtotal of all interest listed on line 1.” and “Subtract this amount from the subtotal and enter the result on line 2.”
Three other adjustments use the same method. For accrued interest, the instructions say to “identify the amount to be subtracted as” “Accrued Interest”. For original issue discount they use “OID Adjustment”, and for amortizable bond premium they use “ABP Adjustment”. For all three the instructions say to “follow the rules earlier under Nominees”. Check the 2025 instructions for the full conditions before you adjust anything.
Line 3: savings bond interest you exclude
The instructions say “If, during 2025, you cashed series EE or I U.S. savings bonds issued after 1989 and you paid qualified higher education expenses for yourself, your spouse, or your dependents, you may be able to exclude part or all of the interest on those bonds.” The form tells you to attach Form 8815. Treasury and savings bond interest on the Form 1099-INT is covered on the Form 1099-INT box 3 page.
Where it goes next
Line 4 is the end of Part I. The form says “Subtract line 3 from line 2. Enter the result here and on Form 1040 or 1040-SR, line 2b”. Part I is followed by a reminder at the bottom: “If line 4 is over $1,500, you must complete Part III.” The general rule for using the schedule at all includes “had over $1,500 of taxable interest or ordinary dividends.” Part III is covered at Schedule B line 7 and Schedule B line 8. The dividend side of the schedule is at Schedule B lines 5 and 6. The return this schedule attaches to is explained on the Form 1040 page.
Edition and line numbers
This page reads the 2025 Schedule B (Form 1040) and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are byte-identical to the archived copies and they are the files for the tax year 2025 return, filed in 2026. The schedule says “Attach to Form 1040 or 1040-SR.” Schedule B has its own instructions booklet, titled “Instructions for Schedule B” (Form 1040). Check the tax year printed on the schedule you are filling in and use the line numbers on that year’s schedule, because a different year’s schedule can number or word its lines differently.
Common mistakes
- Listing tax-exempt interest on line 1. The instructions say “Don’t report on line 1 any” tax-exempt interest, and send it to line 2a of Form 1040 instead.
- Reporting a nominee’s interest without the subtraction. The instructions say “Subtract this amount from the subtotal and enter the result on line 2.”
- Skipping Part III when interest is large. The form says “If line 4 is over $1,500, you must complete Part III.”
Related: Schedule B (Form 1040), Form 1099-INT box 1, tax-exempt interest box 8, Form 1040 lines 2a and 2b, and Form 1099-INT box 3.
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Answer againSources
- Instructions for Schedule B (Form 1040), Interest and Ordinary Dividends (2025): https://www.irs.gov/pub/irs-pdf/i1040sb.pdf
- Schedule B (Form 1040), Interest and Ordinary Dividends (2025): https://www.irs.gov/pub/irs-pdf/f1040sb.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.