Updated October 24, 2026. Quick answer: Line 26 of the 2025 Ohio Schedule of Adjustments is a deduction for certain federal interest and dividends. The instructions say “Enter interest and dividend income, to the extent included in federal AGI, from obligations issued by the U.S. government or its possessions/territories that are exempt from Ohio tax by federal law.”
What this line asks
The printed label is “Federal interest and dividends exempt from state taxation”. The instructions open this way: “Enter interest and dividend income, to the extent included in federal AGI, from obligations issued by the U.S. government or its possessions/territories that are exempt from Ohio tax by federal law.” Background on the federal side is in Form 1040 line 2a and 2b.
Who it applies to
The condition the instructions print is that the income is included in federal AGI and comes from the obligations described in the opening sentence. The form has a matching line in its additions list, “Exempt federal interest and dividends subject to state taxation”, which is line 10. Savers and retirees who hold such obligations can read the wider picture in whether Ohio taxes dividends and interest and Ohio retirement taxes.
What the instructions say to enter
| Step | What the instructions say |
|---|---|
| What to enter | “Enter interest and dividend income, to the extent included in federal AGI, from obligations issued by the U.S. government or its possessions/territories that are exempt from Ohio tax by federal law.” |
| Example that qualifies | “U.S. savings bonds (Series E, EE, H or I)” |
| Example that qualifies | “Treasury notes, bills and bonds” |
| Example that qualifies | “Sallie Maes” |
| Example that is not deductible | “Interest paid on a federal income tax refund” |
| Example that is not deductible | “Interest income from Fannie Maes or Ginnie Maes” |
| More examples | “For more examples, see Information Release IT 1992-01” (the Ohio information release the booklet names). |
The figures the line prints
The instructions for line 26 print no dollar amount or percentage.
Where the result goes next
The form puts the deductions together at the bottom of its second page: “Total deductions (add lines 13 through 46 ONLY). Enter here and on Ohio IT 1040, line 2b”. Your line 26 amount is one of the lines that total picks up. The full layout of the return is on the Ohio IT 1040 line by line page.
Edition and line numbers
This page reads the 2025 Ohio IT 1040 booklet and the 2025 Ohio Schedule of Adjustments from the Ohio Department of Taxation, the current files served on 2026-10-24. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Deducting interest that is not from the described obligations. The instructions say “Enter interest and dividend income, to the extent included in federal AGI, from obligations issued by the U.S. government or its possessions/territories that are exempt from Ohio tax by federal law.”
- Deducting interest on a tax refund. The instructions list “Interest paid on a federal income tax refund” as not deductible.
- Deducting agency securities by assumption. The instructions list “Interest income from Fannie Maes or Ginnie Maes” as not deductible.
Related: whether Ohio taxes dividends and interest, Form 1040 line 2a and 2b, and Ohio retirement taxes.
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Answer againSources
- 2025 Ohio IT 1040 Individual Income Tax Booklet (instructions and forms), Ohio Department of Taxation: dam.assets.ohio.gov
- 2025 Ohio Schedule of Adjustments, Ohio Department of Taxation: dam.assets.ohio.gov
Read from the state revenue documents linked above on October 24, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the state revenue department is the right place to confirm anything consequential.