BobKamman
Level 15

Your understanding is wrong.  Take a look at the instructions that came with the Form 1099-INT.

Box 3. Shows interest on U.S. Savings Bonds, Treasury bills, Treasury bonds,
and Treasury notes. This may or may not all be taxable. See Pub. 550. This
interest is exempt from state and local income taxes. This interest is not
included in box 1.