Yes, you must report all savings account interest on your federal tax return, no matter how small the amount
The IRS requires you to report every dollar of interest your savings account earns. There is no minimum threshold — even $1 of interest must be reported. Your bank will send you a Form 1099-INT in January if your account earned $10 or more during the previous year, but you are required to report the interest whether or not you receive the form.
Interest income is taxed as ordinary income at your regular tax rate. This means the interest is added to your wages, self-employment income, and other sources of income to determine your total taxable income for the year. The tax you owe on that interest depends on your overall income and tax bracket.
If you did not receive a 1099-INT but your account earned interest, you still need to report it. Check your bank statements or your online account to find the total interest earned during the year, then enter that amount on your tax return.
Key Takeaways
- You must report all savings account interest on your federal tax return, even amounts under $10 and even if your bank does not send you a Form 1099-INT.
- Banks send Form 1099-INT only when interest reaches $10 or more, but the reporting requirement exists regardless of whether you receive the form.
- Interest is taxed as ordinary income at your regular tax rate, not at a special lower rate.
- If you have multiple savings accounts, add up the interest from all of them and report the total on one line of your return.
- State income tax rules vary — some states tax interest income and some do not, so check your state's requirements separately.
How to find your interest income if you did not get a 1099-INT
Log into your bank's website or mobile app and look for year-to-date interest earned. Most banks show this in the account summary or in a section labeled "Interest Paid" or "Earnings." You can also call your bank's customer service line and ask them to tell you the total interest your account earned during the tax year.
If you closed the account during the year, the bank may have mailed a 1099-INT to your last known address, or you may be able to request a copy by phone or through your online account. Keep a record of the amount you report, in case the IRS asks questions later.
Where to report interest on your tax return
On the federal return, interest income goes on Schedule 1, Part I, line 2a (for Form 1040). If you are filing a simpler return, the interest line may appear directly on the main form. If you use tax software, it will ask you for interest income and place it in the correct location automatically.
If you have a 1099-INT, enter the amount shown in box 1 of the form. If you are reporting interest your bank did not report to the IRS, enter the amount you calculated from your bank statements. Either way, the line is the same.
Some people have interest income from multiple sources — a savings account, a money market account, a CD, or interest paid on a loan you made to someone else. Add all of these together and report the total on the interest income line. You do not need to break them out separately unless the IRS asks.
State income tax reporting for interest
Most states that have an income tax also tax interest income the same way the federal government does. However, a few states do not tax interest at all, and some have special rules for certain types of accounts.
Check your state's tax agency website or your state tax return instructions to see whether interest is taxable in your state. If it is, you will usually report it on a line similar to the federal return. If your state does not tax interest, you still report it on your federal return — state rules do not override federal law.
What happens if you forget to report interest income
If your bank reported the interest to the IRS on a 1099-INT, the IRS has a record of it. If you do not report it on your return, the IRS will likely catch the discrepancy and send you a notice asking for the tax owed, plus interest and possibly a penalty for underreporting.
If you realize you missed interest income after you filed, you can file an amended return using Form 1040-X. You have three years from the original due date of your return to amend it and claim a refund if you overpaid, or to correct an underreported amount.
Interest from different account types
Savings accounts, money market accounts, and certificates of deposit (CDs) all generate interest that must be reported. High-yield savings accounts earn more interest than traditional savings accounts, so the reporting requirement is the same but the dollar amount is usually larger.
Interest from a regular checking account is also taxable, though most checking accounts earn little or no interest. If your bank pays interest on your checking account, include it in your total interest income.
Interest from bonds, bond funds, and Treasury securities is also reported on Schedule 1, though some of these may come on different forms (like Form 1099-INT for bonds or Form 1099-OID for original issue discount bonds). If you are unsure which form applies to your investment, your financial institution will send you the correct one.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
Yes. The $10 threshold only determines whether your bank sends you a 1099-INT. You must report all interest income on your tax return, regardless of the amount. If you earned $5 in interest, report $5.
What if I have savings accounts at multiple banks?
Add up the interest from all of your accounts and report the total on one line of your return. You do not need to list each bank separately unless the IRS asks. If each bank sent you a 1099-INT, keep all of them with your tax records.
Is interest from a savings account taxed differently than other income?
No. Interest is taxed as ordinary income at your regular tax rate. It is not taxed at a capital gains rate or any other special rate. The interest is added to your other income to calculate your total tax.
Can I deduct interest I paid on a loan from my interest income?
No. Interest you earn is reported as income. Interest you pay on a personal loan cannot be deducted. (Mortgage interest and student loan interest have their own deduction rules, but those are separate from interest income reporting.)
What if my bank made a mistake on the 1099-INT?
Contact your bank and ask them to issue a corrected 1099-INT (marked as a correction). Report the correct amount on your tax return. If you already filed, you may need to file an amended return if the difference is significant.