You report savings account interest, not the account balance itself
The IRS does not care how much money sits in your savings account. What matters is the interest your bank paid you during the year. If your savings account earned interest, that interest counts as taxable income and goes on your federal tax return. The account balance itself — whether it is $500 or $50,000 — stays off your taxes entirely.
Your bank sends you a Form 1099-INT each January if you earned $10 or more in interest during the previous year. This form lists exactly how much interest the bank paid you. You report that number on your tax return, and you owe federal income tax on it at your regular tax rate. Some states also tax interest income, depending on where you live.
If you earned less than $10 in interest, your bank may not send a 1099-INT, but you still owe tax on that interest if you file a return. You report it even if you do not receive the form.
Key Takeaways
- Your savings account balance is never reported on taxes — only the interest your bank paid you during the year.
- Banks send Form 1099-INT when interest reaches $10 or more, but you owe tax on all interest income regardless of the form.
- Interest from savings accounts is taxed as ordinary income at your regular federal tax rate, plus state tax in most states.
- High-yield savings accounts and money market accounts follow the same reporting rules as regular savings accounts.
- If you earned interest but did not receive a 1099-INT, contact your bank to request one or ask for the interest amount.
Where the interest amount appears on your tax return
Interest income goes on Schedule 1 (Form 1040), which is where you report income that does not come from wages or self-employment. Line 8 of Schedule 1 is labeled "Interest." You add up all the interest from all your accounts — savings accounts, money market accounts, CDs, bonds, and any other sources — and enter the total on that line.
If you use tax software, the program walks you through entering the 1099-INT information, and it automatically places the interest on the correct line. If you file by hand or work with a tax preparer, they will know where to put it. The key is having the 1099-INT form or the interest amount from your bank.
Interest income is added to your other income to calculate your total taxable income for the year. Depending on your tax bracket, that interest may push you into a higher tax rate, or it may be taxed at the rate you already pay on wages or other income.
How much tax you owe on savings account interest
The tax you owe on interest depends on your tax bracket — the percentage rate applied to your income. If you earn $50 in interest and you are in the 22% tax bracket, you owe roughly $11 in federal tax on that interest. If you are in the 12% bracket, you owe roughly $6. The exact amount also depends on state taxes, which vary by location.
Some states do not tax interest income at all. Others tax it at a flat rate or as part of your regular state income tax. A few states tax interest differently depending on the type of account or the source of the interest. You can find your state's rules through your state tax agency website or by asking a tax preparer.
Interest earned in a traditional IRA or 401(k) is not taxed in the year it is earned — it grows tax-deferred until you withdraw money from the account. Interest in a Roth IRA is not taxed at all, even when you withdraw it, as long as you follow the withdrawal rules. Regular savings accounts do not have this protection, so all interest is taxed in the year it is earned.
What happens if you do not receive a 1099-INT
If your bank did not send you a 1099-INT but you know you earned interest, contact the bank and ask for the interest amount or request a copy of the form. Banks sometimes mail forms late, or they may have an incorrect address on file. Calling the customer service number on your bank statement is usually the fastest way to get the information.
If the bank cannot locate a 1099-INT and the interest was small (under $10), you can report the interest amount directly on your tax return without the form. Write the amount on Schedule 1, line 8, just as you would if you had the form. Keep a record of the interest — your bank statement or online account history shows it — in case the IRS asks questions later.
Do not skip reporting interest just because you did not receive a 1099-INT. The IRS has records of interest paid to you because banks report it to the IRS as well. Leaving it off your return can trigger a notice asking you to explain the discrepancy.
Savings accounts versus other interest-bearing accounts
Regular savings accounts, high-yield savings accounts, money market accounts, and certificates of deposit (CDs) all report interest the same way. Each one sends a 1099-INT if interest reaches $10, and you report all of it on Schedule 1. The interest rate does not matter — whether your account earns 0.01% or 5%, the reporting rule is identical.
The difference is practical: high-yield savings accounts and money market accounts often pay more interest than regular savings accounts, so you are more likely to receive a 1099-INT and owe more tax. A regular savings account earning $2 in interest may not generate a form, but a high-yield account earning $200 definitely will. Either way, you owe tax on the interest.
Joint accounts work the same way. If you and another person own a savings account together, the bank reports the total interest on one 1099-INT. You and the other owner must decide how to split the interest for tax purposes — usually 50/50 unless you have a different agreement. Each person reports their share on their own tax return.
Reporting interest from multiple banks or accounts
If you have savings accounts at several banks, each bank sends its own 1099-INT (if interest is $10 or more). You add up all the interest from all the forms and enter the total on Schedule 1, line 8. The IRS receives copies of all the 1099-INTs as well, so they know the total too.
Keep all your 1099-INT forms together when you file. If you use tax software, enter each form separately — the software will add them up automatically. If you file by hand, add the amounts yourself and write the total on your return. Attach Copy B of each 1099-INT to your paper return if you are mailing it in, though the IRS increasingly prefers electronic filing.
If you have accounts at the same bank but under different names or account types, the bank may send separate 1099-INTs for each one. This is normal. Add all the interest together regardless of how many forms you receive.
Interest from savings accounts you closed during the year
If you closed a savings account partway through the year, the bank still reports the interest earned up to the closing date on a 1099-INT. You report that interest on your tax return for the year you closed the account, not the year you opened it. The 1099-INT will show the correct year in the box labeled "Tax year."
Sometimes a bank takes a few weeks to send a 1099-INT after you close an account. If you do not receive it by late January, contact the bank and ask them to send it or provide the interest amount. You need this information to file your return accurately.
If you moved money from one bank to another but kept the account open under a different institution, you will receive separate 1099-INTs from each bank for the interest earned while the account was active at that bank. Add all of them together on your tax return.
Frequently Asked Questions
Do I have to report a savings account I did not use all year?
No. If the account earned no interest, there is nothing to report. The account balance itself is never reported on taxes. Only report interest if the bank paid you any.
What if I earned interest but my bank says it is too small to report?
Report it anyway. Banks only send a 1099-INT when interest reaches $10, but you owe tax on all interest income. If you earned $5 in interest, report that $5 on Schedule 1, line 8.
Can I deduct fees my bank charged against the interest I earned?
No. You report the full interest amount on your tax return. Bank fees are not deductible for most taxpayers. You pay tax on the interest and absorb the fees separately.
Does moving money between my own savings accounts count as income?
No. Transferring money from one account to another is not income — it is just moving your own money around. Only the interest the bank pays you is taxable.
What if I earned interest in a joint account with someone else?
You and the other owner must split the interest for tax purposes. Usually this means 50/50, but you can use a different split if you have a written agreement. Each person reports their share on their own return.