Yes, you must report checking account interest on your taxes, but the amount is usually small
If your checking account earns interest, the bank will send you a form called a 1099-INT at the end of the year showing how much you earned. You then report that amount on your federal tax return. This is true even if the interest is only a few dollars — there is no minimum amount that lets you skip reporting it.
Most checking accounts earn very little or no interest at all, so many people never receive a 1099-INT. But if your account does pay interest and the total reaches $10 or more in a calendar year, the bank is required by law to send you the form. Even if the amount is less than $10, you still owe tax on it — you just have to track it yourself.
The reason is straightforward: interest is income. The IRS considers any money your bank pays you to be taxable income, the same way wages or investment earnings are. Your bank reports it to the IRS, so the IRS will expect to see it on your return.
Key Takeaways
- Banks send a 1099-INT form when checking account interest reaches $10 or more in a year, and you must report this on your tax return.
- Interest under $10 still counts as taxable income even without a 1099-INT, and you are responsible for reporting it yourself.
- High-yield checking accounts pay more interest than traditional accounts, so they are more likely to trigger a 1099-INT.
- You report the interest on your federal return, and the tax owed depends on your overall income and tax bracket.
When the bank sends you a 1099-INT
Your bank will mail or email you a 1099-INT by January 31 of the following year. For example, interest you earned during 2024 will be reported on a form you receive by January 31, 2025. The form shows your account number, the bank's name, and the total interest paid.
You receive a 1099-INT only if the interest totaled $10 or more. However, some banks send the form even for smaller amounts as a courtesy. If you do not receive one but your account earned interest, you can log into your online banking or call the bank to ask how much you earned.
The bank sends a copy to you and a copy to the IRS. This means the IRS already knows about your interest income before you file your return, so leaving it off your taxes will likely trigger a notice.
How to report the interest on your tax return
The interest goes on your federal tax return in a section for income. If you use tax software, you will enter the 1099-INT information when prompted, and the software will place it in the correct spot. If you file by hand or with a tax preparer, you report it on Schedule B (Interest and Ordinary Dividends) or directly on Form 1040, depending on the total amount and your situation.
The exact line depends on whether you have other interest income. If your checking account is your only source of interest, the process is straightforward: enter the amount from the 1099-INT where the software or form asks for interest income. If you earned interest under $10 and did not receive a 1099-INT, you still report it — just write in the amount you calculated or found in your bank statements.
You do not need to do anything special or file extra forms just because the interest came from a checking account rather than a savings account or bond. The IRS treats all interest the same way.
How much tax you owe on the interest
The tax on checking account interest depends on your overall income and your tax bracket. Interest is taxed as ordinary income, meaning it is added to your wages, self-employment income, or other earnings and taxed at your regular rate.
If you earned $100 in checking account interest and you are in the 22% tax bracket, you would owe roughly $22 in federal tax on that interest (though state taxes may also explore). If you are in the 12% bracket, you would owe roughly $12. The exact amount also depends on whether you have deductions that reduce your taxable income.
For most people with small checking account interest, the tax owed is minimal — often just a few dollars. But it still counts, and it still has to be reported.
High-yield checking accounts and larger interest amounts
Some banks offer high-yield checking accounts that pay significantly more interest than traditional checking accounts. These accounts might pay 4% to 5% annual interest on your balance, compared to 0% or 0.01% at many large banks. If you keep a large balance in a high-yield account, your interest income could be substantial.
For example, if you keep $10,000 in a high-yield checking account earning 4.5% interest, you would earn $450 in a year. That $450 is taxable income and would appear on a 1099-INT. The tax owed would depend on your bracket, but it could be $50 to $100 or more.
High-yield checking accounts are real and legitimate, but they usually come with requirements: you might need to set up direct deposit, make a certain number of debit card transactions per month, or maintain a minimum balance. Read the terms carefully before opening one.
What to do if you did not receive a 1099-INT
If your account earned interest but you did not receive a 1099-INT by early February, contact your bank. Ask them to confirm the interest amount and whether they sent the form. If the interest was under $10, the bank may not be required to send a form, but you can still ask for the exact figure so you can report it.
If the bank confirms they sent a 1099-INT but you never received it, ask them to resend it or provide the information in writing. Keep this documentation with your tax records. If you file your return before receiving the form, you can file an amended return once you have the correct amount.
Do not skip reporting the interest just because you did not receive a form. The IRS may have a copy, and reporting it yourself prevents problems later.
State taxes on checking account interest
In addition to federal tax, most states tax interest income as well. The rules vary by state. Some states tax all interest the same way the federal government does. Others have different rates or exemptions for certain types of income.
If you live in a state with an income tax, check your state's tax form or website to see where to report interest. Many state tax software programs ask about interest income automatically. If you are unsure, contact your state's tax department or a tax preparer in your state.
A few states have no income tax at all, so residents of those states would only owe federal tax on checking account interest.
Frequently Asked Questions
What if my checking account interest is only $5?
You still owe tax on it, even though it is under the $10 threshold for receiving a 1099-INT. The bank is not required to send you a form, but you are required to report the income. Check your bank statements or online banking to find the exact amount and report it on your tax return.
Do I have to report interest if I only had the account for part of the year?
Yes. Any interest earned during the calendar year counts, regardless of when you opened or closed the account. If you opened a checking account in November and earned $3 in interest by December 31, that $3 is taxable income for that year.
Can I deduct anything against the interest income?
No. Interest income is reported as-is; you cannot deduct account fees or other expenses against it. However, if you have investment losses or other deductions, those may reduce your overall taxable income, which indirectly lowers the tax on your interest.
What if I earned interest in two different checking accounts?
Add up the interest from all accounts and report the total. If each account earned $8 but you have two accounts, you report $16 total. Each bank will send a separate 1099-INT if their individual amount reaches $10, or you may receive one combined form if you have multiple accounts at the same bank.
Do I need to keep the 1099-INT after I file my taxes?
Keep it for at least three years in case the IRS asks questions about your return. After that, you can discard it, though many people keep tax documents longer for their own records. Store it with your other tax paperwork for that year.