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RESEARCH CENTER

Floating Rate Notes (FRNs): Tax Considerations

The U.S. Treasury began issuing Floating Rate Notes (FRNs) in January 2014.

What Is Taxable Income?

Floating Rate Notes (FRNs) pay interest quarterly. This interest is subject to federal tax, but exempt from state and local income taxes.

Keeping Track of Your Taxable Income

TreasuryDirect

If you hold an FRN in TreasuryDirect, you can view your Form 1099-INT online and print it. The form is posted at the beginning of the year. Also, a record of all taxable transactions is available at any time.

Bank or Broker

If you hold an FRN with a bank or broker, consult your bank or broker.

Tax Withholding

If you hold an FRN with us, we can ease your tax burden by withholding up to 50 percent of your interest earnings. Go online in TreasuryDirect to specify the percentage you want us to withhold.

We transfer your withholdings to the Internal Revenue Service and report the withheld amount on your Form 1099-INT.