Updated October 17, 2026. Quick answer: Box 2 of Form 1099-OID shows qualified stated interest on the obligation for the year, an amount separate from the OID in box 1. It concerns anyone whose discounted bond or deposit also pays regular interest. Publication 550 says to add it to the box 1 figure for your taxable interest, which is listed on Schedule B (Form 1040).
Related reading on this site: IRS Publication 1212.
What box 2 reports
The recipient instructions give a short definition: “Shows qualified stated interest on this obligation for the year, which is an amount separate from the OID.”
The box is labeled “Other periodic interest” on the form, and it is an amount separate from the OID in Form 1099-OID box 1. The wider layout of the form is in the Form 1099-OID boxes guide.
What qualified stated interest means
Publication 550 defines the phrase: “In general, this is stated interest unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually at a fixed rate.”
The filer instructions tell the payer what to enter: “Enter any qualified stated interest paid or credited on this obligation during the year.”
Where box 2 goes on your return
The form says: “If you held the obligation the entire year, report this amount as interest income on your tax return.” Publication 550 describes how the two boxes combine: “Form 1099-OID, box 2 shows any taxable interest on the obligation other than OID.” “Add this amount to the OID shown in Form 1099-OID, box 1 and include the result in your total taxable income.”
Both amounts are interest for reporting purposes, and the publication lists the boxes together: “In most cases, you must report the entire amount in Form 1099-OID, boxes 1, 2, and 8 as interest income.” Payer names and amounts are listed on Schedule B (Form 1040), Part I, and the total carries to Form 1040.
If you bought or sold the obligation during the year
A partial year of ownership changes the treatment. The form says: “If you disposed of the obligation or acquired it from another holder during the year, see Pub. 550 for reporting instructions.”
Publication 550 has a separate discussion titled Bonds Sold Between Interest Dates. For a sale it says: “If you sell a bond between interest payment dates, part of the price represents interest accrued to the date of sale.” “You must report that part of the sales price as interest income for the year of sale.”
For a purchase: “If you buy a bond between interest payment dates, part of the purchase price represents interest accrued before the date of purchase.” “When that interest is paid to you, treat it as a return of your capital investment, rather than interest income, by reducing your basis in the bond.” The publication ties this directly to the form: “If you bought and/or sold an obligation during the year, see Bonds Sold Between Interest Dates, earlier, for information about the treatment of periodic interest that may be shown in Form 1099-OID, box 2.”
When boxes 2 and 8 or boxes 2 and 11 both have amounts
The form reads the box differently depending on what else is filled in. For Treasury obligations: “If there is an amount in both boxes 2 and 8, the amount in box 2 is interest on a U.S. Treasury obligation and is exempt from state and local income taxes.” Box 8 is covered on the page for Form 1099-OID box 8, and the related Form 1099-INT page is the Form 1099-INT page on savings bond and Treasury interest.
For tax-exempt obligations: “If there is an amount in both boxes 2 and 11, the amount in box 2 is tax-exempt interest and is not included in interest income on your tax return.” “In general, see how to report tax-exempt interest in the Instructions for Form 1040.” Publication 550 adds where the tax-exempt total goes: “Report the total on Form 1040 or 1040-SR, line 2a.” The matching Form 1099-INT box is explained on the page for Form 1099-INT box 8.
Interest may be on Form 1099-INT instead
The filer instructions allow the payer to use a different form for this interest: “However, you may report any qualified stated interest on this obligation on Form 1099-INT rather than on Form 1099-OID.” “For example, you may report any qualified stated interest on Treasury Inflation Protected Securities in box 3 of Form 1099-INT rather than in box 2 of Form 1099-OID.”
So if you hold a discounted obligation and box 2 is empty, check whether the interest came on a separate Form 1099-INT. If your own OID form has an amount in box 9 (investment expenses of a single-class REMIC), the form says: “This amount is included in box 2.” “Note: This amount is not deductible.”
Edition and box numbers
Form 1099-OID has one edition on file for this page. The form is marked “(Rev. January 2024)”, and that is the edition the IRS website served as the current form on October 17, 2026. No other edition is compared here, so there is no difference between editions to report. Publication 550 for 2025 returns is used for where amounts go on the return.
Look at the line that reads “For calendar year” on the copy you received and confirm it shows the tax year you are filing before you rely on any box description on this page. The box numbers above are the numbers printed on the form itself.
Common mistakes
- Reporting only box 1 and forgetting box 2. The publication says to “Add this amount to the OID shown in Form 1099-OID, box 1”.
- Ignoring a purchase or sale in the middle of the year. The form says “see Pub. 550 for reporting instructions.”
- Treating every box 2 amount as fully taxable. The form says that with an amount in both boxes 2 and 11 “the amount in box 2 is tax-exempt interest and is not included in interest income on your tax return.”
Related: Schedule B (Form 1040), Form 1099-INT box 8, savings bond and Treasury interest, and Form 1040.
Sources
- Form 1099-OID (Rev. January 2024) with Instructions for Recipient: https://www.irs.gov/pub/irs-pdf/f1099oid.pdf
- Instructions for Forms 1099-INT and 1099-OID (Rev. January 2024): https://www.irs.gov/pub/irs-pdf/i1099int.pdf
- Publication 550, Investment Income and Expenses (for 2025 returns): https://www.irs.gov/pub/irs-pdf/p550.pdf
Read from the IRS documents linked above on October 17, 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.