Yes, you report savings account interest as income on your federal tax return
Any interest your savings account earns counts as taxable income. The bank or credit union sends you a Form 1099-INT each January showing how much interest you received during the previous year. You then report that amount on your tax return, usually on Schedule B if you have other investment income, or directly on Form 1040 if the interest is your only investment income.
The IRS requires this because interest is income — money you earned without working for it. It does not matter whether you spent the interest, reinvested it, or left it sitting in the account. If the account earned it, you owe tax on it.
The amount of tax you pay depends on your overall income and tax bracket. A person earning $30,000 a year pays tax on $50 in interest at a lower rate than someone earning $150,000. Some people owe no federal income tax at all, even with interest income, if their total income falls below the filing threshold for their age and filing status.
Key Takeaways
- Your bank sends Form 1099-INT by January 31 showing all interest earned in the previous year, and you must report this on your tax return.
- You report savings interest on Schedule B (if you have other investment income) or directly on Form 1040 (if it is your only investment income).
- Interest income is taxable at your regular income tax rate, which varies based on your total income and filing status.
- If your total income is below the filing threshold for your age and status, you may not owe tax even with interest income, but you might still want to file to claim refundable credits.
- Some states also tax savings interest, so check your state's rules separately from federal requirements.
When the bank sends you Form 1099-INT
Banks and credit unions must send Form 1099-INT to you and to the IRS by January 31 of the year following the tax year. If you earned $10 or more in interest during the calendar year, the form is required. Some banks send it even if you earned less, but $10 is the threshold.
The form shows the account number, the total interest paid, and sometimes a breakdown by type (ordinary interest, U.S. savings bond interest, or federal interest). Check the form against your own records — banks make mistakes, and if the amount is wrong, you can contact the bank to request a corrected form (Form 1099-INT with "CORRECTED" printed on it).
If you do not receive a Form 1099-INT by early February, contact the bank directly. Do not wait until tax time. If the bank cannot locate it or says it was not sent, ask for a duplicate or a written statement of the interest paid.
How to report the interest on your tax return
The place you report savings interest depends on whether you have other investment income. If you have interest from multiple accounts, dividends, capital gains, or other investment income, you report all of it on Schedule B (Interest and Ordinary Dividends). You then attach Schedule B to your Form 1040 and include the total in your income.
If savings interest is your only investment income and the total is $1,500 or less, you can report it directly on Form 1040 without filing Schedule B. Look for the line labeled "Interest" on the main form and enter the amount there.
If you have a joint account with someone else, the interest is split between you for tax purposes. The bank may report the full amount to the IRS under one person's Social Security number, so you and the account holder need to coordinate on who reports what. If the bank reported it all under your name but you only own half, you can adjust it on your return or contact the bank for a corrected form.
What happens if your interest income is very small
If you earned only a few dollars in interest, you still have to report it. There is no minimum amount that makes interest "too small to report." However, if your total income (including the interest) falls below the filing threshold for your age and filing status, you may not owe any tax.
For 2024, the filing threshold for a single person under 65 is $14,600 in gross income. For a married couple filing jointly with both spouses under 65, it is $29,200. These thresholds change each year. If your income is below the threshold, you do not have to file a federal return, even if you received a Form 1099-INT.
However, you might want to file anyway if you had taxes withheld from other income or if you are may have access to to refundable credits like the Earned Income Tax Credit. Filing gets you money back that you would otherwise lose.
State taxes on savings interest
Most states tax interest income the same way the federal government does — as ordinary income at your state tax rate. A few states do not tax interest at all. Check your state's tax website or ask a tax preparer whether your state taxes savings interest.
If you live in a state that taxes interest, you report it on your state return using the same Form 1099-INT. Some states have their own schedules or forms, but the amount is usually the same as what you reported to the IRS. A handful of states offer small exemptions for interest earned by retirees or people over a certain age, so if that applies to you, look into whether your state has that break.
What to do if you did not receive Form 1099-INT
If you earned interest but the bank did not send you a form, contact the bank and ask for a statement showing the interest paid. You still have to report the interest even without the form — the IRS has a copy, and if you do not report it, the discrepancy will show up when the IRS matches your return to the forms they received.
If the bank cannot provide the information, use your own records: bank statements, passbooks, or online account history. Write down the total interest earned during the year and report that amount on your return. Include a note explaining that you did not receive Form 1099-INT but are reporting based on your account records.
If the bank sent the form to the wrong address or to a previous address, contact them to request a duplicate or a corrected form sent to your current address. This is especially important if you moved during the year.
Interest from different types of savings accounts
All interest is taxable, regardless of the account type. A high-yield savings account, money market account, certificate of deposit (CD), or traditional passbook savings account all generate taxable interest. The rate does not matter — whether you earned 0.01% or 5%, it all counts as income.
If you have multiple savings accounts at the same bank or different banks, each one may send a separate Form 1099-INT, or the bank may combine them into one form. Either way, you add up all the interest and report the total on your return.
Interest from a regular savings account is different from interest or earnings in a retirement account like an IRA or 401(k). Money in those accounts grows tax-deferred, meaning you do not report the interest or gains each year. You only pay tax when you withdraw the money in retirement. Do not confuse the two — only report interest from non-retirement savings accounts on your annual tax return.
Frequently Asked Questions
Do I have to file a tax return if I only earned $15 in savings interest?
Not if that is your only income and it is below your filing threshold. For 2024, a single person under 65 with only $15 in income does not have to file. However, if you had taxes withheld from a job or are may have access to to refundable credits, filing may get you money back, so it is worth checking your specific situation.
What if the Form 1099-INT shows the wrong amount?
Contact the bank immediately and ask for a corrected form. The bank will send you a new Form 1099-INT marked "CORRECTED" and will also send a corrected copy to the IRS. Report the correct amount on your return. Keep the corrected form with your tax records.
Can I deduct any expenses related to my savings account?
No. You cannot deduct account fees, maintenance charges, or any other costs related to holding a savings account. You report the full interest amount as income with no deductions.
Do I report interest from a joint savings account differently?
The bank reports the interest under one person's Social Security number, usually whoever is listed first on the account. You and the other account holder need to decide who reports what portion. If you each own half, you might each report half the interest, or one person reports it all and the other does not. Coordinate with the account holder and keep records of your agreement in case the IRS asks.
Is interest from a CD taxable?
Yes. Interest from a certificate of deposit is fully taxable in the year it is earned, even if you cannot withdraw the money without a penalty. The bank sends Form 1099-INT showing the interest, and you report it on your return the same way you would for any other savings interest.