Report the interest on your tax return using Form 1040 and Schedule B

The IRS requires you to report all interest your bank paid you during the year, no matter how small. Your bank will send you a Form 1099-INT in January or early February showing the total interest earned. You then transfer that amount to Schedule B (Interest and Ordinary Dividends) and attach it to your Form 1040 when you file.

If your total interest income is $1,500 or less and you have no other investment income, you can report the interest directly on Form 1040 without filing Schedule B — but you still need the Form 1099-INT from your bank. The interest gets added to your other income and taxed at your ordinary income tax rate, which varies based on your tax bracket.

You do not pay tax on the interest separately. Instead, the interest amount increases your total taxable income for the year, which may push you into a higher tax bracket or reduce tax deductions you would otherwise receive. This is why even small savings account interest matters on your return.

Key Takeaways

  • Your bank sends Form 1099-INT by early February showing all interest paid in the previous year, and you must report this amount on your tax return.
  • Interest income goes on Schedule B if you have more than $1,500 in interest, or directly on Form 1040 if you have $1,500 or less.
  • Interest is taxed as ordinary income at your marginal tax rate, not as a separate tax category.
  • If your bank does not send a Form 1099-INT, you still owe tax on the interest and should report it based on your account statements.
  • High-yield savings accounts, money market accounts, and certificates of deposit all generate reportable interest income.

When you receive Form 1099-INT from your bank

Banks mail Form 1099-INT to customers who earned $10 or more in interest during the calendar year. The form shows the account holder's name, Social Security number, the bank's name and tax ID, and the total interest paid. You will receive one copy in the mail and the IRS receives a copy automatically.

If you have multiple savings accounts, CDs, or money market accounts at different banks, you will receive a separate Form 1099-INT from each one. You must add all the interest amounts together when you report on your tax return. If you have accounts at the same bank, that bank may combine the interest on a single form or send separate forms depending on how the accounts are registered.

Check the Form 1099-INT against your own records. If the amount shown does not match your account statements, contact the bank to request a corrected form (Form 1099-INT with a corrected box marked). You have until the tax filing deadline to request a correction, though the sooner you catch an error the better.

How interest income affects your tax bracket and deductions

Interest income is added to your wages, self-employment income, and any other income you earned that year. This combined total determines your tax bracket and whether you lose deductions that phase out based on income level. For example, if you are close to the income limit for the Earned Income Tax Credit or the Child Tax Credit, additional interest income could reduce or eliminate those credits.

The tax you owe on interest depends entirely on your overall income and filing status. A person in the 12% tax bracket pays 12% tax on the interest; a person in the 22% bracket pays 22%. There is no separate "interest tax" — it simply becomes part of your taxable income.

If you have a very small amount of interest (under $100), it may not change your tax bracket at all. But if you have $5,000 or more in interest from a high-yield savings account, it could meaningfully increase the tax you owe or reduce refunds you would otherwise receive.

What to do if you did not receive a Form 1099-INT

If you earned $10 or more in interest but your bank did not send a Form 1099-INT by early February, contact the bank and ask them to send it. Banks sometimes delay or send forms to the wrong address. Give them a few extra days, but if it does not arrive by mid-February, call the bank's customer service line and request a duplicate.

If the bank confirms they did not issue a form because they recorded less than $10 in interest, you still owe tax on that interest. Report it on your return based on your account statements or year-end interest summary from your online banking portal. The IRS may not have a record of this small amount, but you are still required to report it.

If you cannot locate the exact amount, your bank's website usually shows a year-to-date interest total in your account history. You can also request a statement covering the full calendar year. Do not guess or round — use the actual figure from your account records.

Interest from different account types and how to report each

All interest-bearing accounts generate reportable income. High-yield savings accounts, regular savings accounts, money market accounts, and certificates of deposit (CDs) all send Form 1099-INT. Interest from bonds held in a brokerage account appears on Form 1099-INT from the brokerage, not from the bond issuer. Treasury bills, notes, and bonds generate interest reported on Form 1099-INT as well.

Interest from I Bonds (Series I Savings Bonds) is reported differently. You do not owe tax on I Bond interest until you cash the bond or it matures, even though the interest accrues each month. When you redeem the bond, the issuer sends Form 1099-INT showing the total interest earned. If you hold the bond for decades, you report all that accumulated interest in the year you cash it.

Penalty interest from a bank (such as interest paid when the bank made an error on your account) is also taxable and reported on Form 1099-INT. Dividend income from stocks or mutual funds is reported separately on Form 1099-DIV, not Form 1099-INT.

Filing your return with interest income included

When you file your return, enter the interest amount from Form 1099-INT on Schedule B, line 1 (or line 5 if you are reporting tax-exempt interest, which is rare for savings accounts). If you have $1,500 or less in interest and no other investment income, you can skip Schedule B and enter the amount directly on Form 1040, line 2b.

Use tax software or work with a tax preparer to ensure the interest is entered correctly. The software will automatically add it to your income total and recalculate your tax liability and any credits or deductions that depend on income level. If you file by paper, make sure the Form 1099-INT is attached to your return or the IRS may send you a notice.

You do not need to make estimated tax payments on interest income unless your total tax liability for the year is expected to be very high. Most people simply report the interest when they file their annual return and pay any additional tax owed at that time, or receive a smaller refund than they would have without the interest.

Frequently Asked Questions

Do I have to pay tax on interest if I earned less than $10?

Yes. The $10 threshold only determines whether the bank sends you a Form 1099-INT. You still owe tax on any interest earned, even $1 or $5. Report it on your return using your account statements if you do not receive a form.

Can I deduct the tax I pay on savings account interest?

No. Interest income is taxable, but the tax you pay on it is not deductible. You cannot reduce your taxable income by the amount of tax owed on the interest.

What if I moved money between accounts during the year and earned interest in multiple places?

Add all the interest together. Each bank sends a separate Form 1099-INT, and you report the total on your tax return. The IRS receives copies of all the forms and expects to see the combined total on your return.

Does interest from a joint savings account get split between owners for tax purposes?

The bank typically reports all interest to the primary account holder on Form 1099-INT. If the account is truly joint and both owners should report half the interest, you may need to file an amended return or work with a tax preparer to split the income correctly. Check your account agreement and the Form 1099-INT to see how the bank handled it.

If I earned interest in 2024, when do I have to report it?

You report 2024 interest when you file your 2024 tax return, which is due April 15, 2025 (or the next business day if that falls on a weekend). You should receive Form 1099-INT by February 1, 2025.