Yes, you report savings account interest on your tax return
Interest your bank pays you on a savings account is taxable income. You report it on your federal tax return using Form 1040, and the amount you owe in tax depends on your total income for the year and your tax bracket. The bank sends you a Form 1099-INT in January or early February each year showing how much interest you earned in the previous year. That form tells you exactly what number to report.
The threshold for reporting is low: if you earned $10 or more in interest during the year, the bank must send you a 1099-INT. Even if you earned less than $10, you still owe tax on it—you just won't receive the form. The IRS expects you to report all interest income, regardless of the amount.
Interest is treated as ordinary income, not as a capital gain or investment income. This means it gets added to your wages, self-employment income, or other earnings and taxed at your regular rate. The tax you owe depends on your total income and filing status, not on the interest amount alone.
Key Takeaways
- Your bank sends you Form 1099-INT if you earned $10 or more in interest during the year, and you report that amount on your federal tax return.
- Interest income is taxed as ordinary income at your regular tax rate, not at a special rate for investments.
- You must report all interest earned, even amounts under $10 or if you did not receive a 1099-INT form.
- The interest is reported on Form 1040 and added to your other income to calculate your total tax owed.
When the bank sends you the 1099-INT form
Banks mail Form 1099-INT by January 31 each year for interest paid during the previous calendar year. If you have multiple savings accounts at different banks, you will receive a separate 1099-INT from each one. If you have multiple accounts at the same bank, they may combine the interest on a single form or send separate forms depending on how the accounts are registered.
The form shows the interest amount in Box 1. Some banks also offer other types of interest income—such as interest from a certificate of deposit or money market account—and those appear on the same form. You should receive the form even if you closed the account during the year, as long as interest was paid before the account closed.
If you do not receive a 1099-INT by early February, contact your bank. You can also log into your online banking portal or call customer service to request a copy. The bank is required to send it, and you need it to file your return accurately.
How to report the interest on your tax return
On Form 1040, interest income goes on Line 1b under "Income." You enter the total amount from all your 1099-INT forms combined. If you use tax software, you enter the amount when prompted for interest income, and the software places it in the correct location automatically.
You do not need to attach the 1099-INT form to your return when you file, but you should keep a copy for your records. The IRS receives a copy directly from the bank, so the amount you report should match what appears on the form. If there is a discrepancy—for example, if the form shows $150 but you only earned $100—contact your bank to request a corrected form.
If your total income is below the filing threshold for your age and filing status, you may not be required to file a return at all. However, if you have taxes withheld from other sources, you may want to file anyway to get a refund. The interest itself does not change whether you must file; your total income does.
The difference between interest earned and interest reported
Interest accrues (builds up) throughout the year, but the bank reports only the interest actually paid to your account by December 31. If you opened a savings account on December 15 and earned $2 in interest before year-end, that $2 appears on your 1099-INT for that year. Interest earned in January of the following year appears on next year's form.
If you close a savings account mid-year, the bank calculates interest through the closing date and includes it on that year's 1099-INT. You report it in the year the account closed, not in the year you opened it. This matters if you move money between banks or consolidate accounts—each bank reports only the interest it actually paid.
What happens if you earn very little interest
Many savings accounts currently earn less than 1% annually, which means a $1,000 balance might earn only $5 to $10 per year. That interest is still taxable income. If you earned $8 in interest, you do not receive a 1099-INT form, but you still owe tax on the $8 if you are required to file a return.
The tax you owe on small amounts of interest is usually minimal. If you are in the 12% tax bracket, $8 in interest costs you roughly $1 in federal tax. However, some states also tax interest income, so your total tax may be slightly higher. Check your state's rules if you live in a state with an income tax.
If you earned less than $10 in interest and did not receive a 1099-INT, you can find the exact amount in your account statements or online banking portal. Add up the interest deposits for the entire year and report that total on your return.
Interest from different account types
Savings accounts, money market accounts, and certificates of deposit (CDs) all generate interest reported on Form 1099-INT. High-yield savings accounts earn more interest than traditional savings accounts, so you receive a larger 1099-INT, but the reporting process is identical. The form does not distinguish between account types—it straightforward reports the interest amount.
If you have a CD that matures during the year, the interest paid through the maturity date appears on that year's 1099-INT. If you have a CD that does not mature until the following year, no interest is reported until it matures and you receive the payment. Some CDs allow you to withdraw interest annually, and each withdrawal is reported in the year you receive it.
Interest-bearing checking accounts also generate 1099-INT forms if the interest exceeds $10. The process is the same: the bank reports it, and you include it on your tax return as ordinary income.
State and local taxes on savings interest
Most states that have an income tax also tax interest income. The amount you owe depends on your state's tax rate and your total income. Some states exempt interest earned on savings accounts under certain conditions, but most do not. Check your state's tax authority website or your state tax return instructions to see how interest is treated in your state.
A few states—including Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming—do not have a state income tax at all, so you owe no state tax on savings interest. If you live in one of these states, you report interest only on your federal return.
If you live in a state with local income tax (such as New York City or Ohio), you may also owe local tax on the interest. Your state tax return instructions will specify whether to include interest income on the local return as well.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
Yes. The bank does not send you a 1099-INT form if you earned less than $10, but you still owe tax on all interest income. Find the amount in your account statements and report it on your return. The IRS expects you to report all interest, regardless of the amount.
What if the 1099-INT amount is wrong?
Contact your bank when ready and ask for a corrected form (called an amended 1099-INT). The bank will issue a corrected form and send copies to you and the IRS. Do not file your return until you have the correct form, or file an amended return if you already filed.
Can I deduct the tax I pay on savings interest?
No. Interest income is added to your other income, and you pay tax at your regular rate. You cannot deduct the interest itself or the tax you owe on it. However, if you paid investment fees to earn the interest, those may be deductible under certain conditions—check IRS rules or consult a tax professional.
Do I report interest from a joint savings account differently?
The bank reports the full interest amount on the 1099-INT, but it shows only one taxpayer's name and Social Security number. You and the co-owner must decide how to split the interest for tax purposes. Usually, you split it based on each person's ownership share. Both of you report your portion on your individual returns.
What if I earned interest but closed the account before filing my taxes?
You still report the interest on your return. The bank sends you a 1099-INT for interest paid through the closing date. Closing the account does not change your tax obligation—you owe tax on all interest earned during the year, whether the account is open or closed when you file.