Interest income includes money you earned from a bank or money market account, as well as bonds.
Interest on U.S. Treasury and savings bonds is taxable on your federal return, but it's usually tax-free on the state return. And this works in reverse as well—interest on municipal bonds is tax-free at the federal level. Municipal bond interest is also often tax-free at the state level if you invest in a bond that's issued in the same state where you reside.
There are also some ways to defer interest income to a future tax year. Some banks will pay interest at the maturity of a certificate of deposit. You can also defer reporting interest on U.S. savings bonds until the savings bond is redeemed.
Interest income is reported by banks and other financial institutions on Form 1099-INT.
Filing Schedule B of Form 1040 is mandatory if you have over $1,500 in interest and/or dividends.