
Are High-Yield Savings Accounts Taxable?
Quick Answer
Interest on savings accounts—including high-yield savings—are taxable as ordinary income. Save your 1099-INT forms and use them to total up your interest income for the year.

The interest you earn from a high-yield savings account is taxable on your federal tax return as ordinary income, along with interest from other savings or checking accounts and yields on certificates of deposit (CDs).
Reporting your taxable interest to the IRS is simple. Here's what you need to know about paying taxes on interest from your high-yield savings account, as well as a few tips for reducing your tax bill while saving for big expenses like retirement, college costs and medical expenses.
Is Savings Account Interest Taxed?
Yes, savings account interest is taxed on your federal tax return, as is interest on most bank or credit union accounts. Interest is taxed the same as your regular earnings.
How Much Interest Did You Earn?
The easiest way to track the interest you earned on your high-yield savings is to check Form 1099-INT from your financial institution. Form 1099-INT reports the interest you earned during the previous year on all accounts at the financial institution that issues it. Your bank or credit union will issue a 1099-INT if you've earned at least $10 in interest. Forms are sent out by the end of January, so keep an eye out.
What if You Don't Receive a 1099-INT?
Check your account statements or online account to find out how much interest you earned during the year. If you didn't earn at least $10, you may not receive a 1099-INT. The IRS requires you to report and pay taxes on any interest you've earned, whether or not you receive a 1099-INT. For that reason, you should report any interest you receive, regardless of how little.
Learn more: What Qualifies as Taxable Income?
Can I Avoid Paying Taxes on My Savings Account?
If you earned interest on your savings, you generally can't avoid paying taxes on it. One potential exception might be if your total taxable income for the year was lower than the federal threshold for filing taxes. Check the table below to see if your taxable income was below the threshold, leaving you off the hook for filing a return.
Filing Status | Under 65 Years of Age as of 2024 | Over 65 Years of Age as of 2024 |
---|---|---|
Single | $14,600 or more | $16,550 or more |
Head of household | $21,900 or more | $23,850 or more |
Married filing jointly | $29,200 or more ($30,750 if one spouse is over 65) | $32,300 or more |
Married filing separately | $5 or more | $5 or more |
Qualifying surviving spouse | $29,200 or more | $30,750 or more |
Source: IRS
How to Report High-Yield Savings Account Interest on Your Tax Return
To report interest on your federal tax return, you'll need your 1099-INT forms and your Form 1040. If you're using tax preparation software—or are working with a tax advisor—you'll be guided through the next steps. Preparing your own tax return? Here are three steps to follow:
- Add up your interest. Total the interest income from all 1099-INTs. Add any stray interest not reported on a 1099-INT, if you have any. You may have additional taxable interest reported on Form 1099-OID or included in year-end tax forms from your investment brokerage.
- Enter the total on your tax return. Enter your total interest income on line 2b of your Form 1040.
- Fill out Schedule B if needed. If you've earned $1,500 or more in taxable interest or dividends (according to step 2), also complete Schedule B, Interest and Ordinary Dividends.
Tip: What counts as interest to the IRS? Interest paid on savings accounts, checking accounts, money market accounts, CDs and savings bonds; interest income from Treasury bills, notes and bonds; and other interest paid to you by a business (if it exceeds $600).
The interest you report is added to your taxable income for the year, along with your wages, tip income, Social Security payments and so on. After subtracting standard or itemized deductions, apply marginal tax rates (or tax brackets) to your taxable income to calculate the tax you owe.
How to Reduce Taxes on Savings Accounts
Although you can't skip paying taxes on your savings interest, you can reduce the taxes you owe by putting some of your savings into tax-advantaged accounts. Here are a few alternatives to consider:
- Traditional 401(k) and 403(b) retirement plans: Traditional employer-based 401(k) and 403(b) retirement plans allow you to exclude contributions from your taxable income, reducing the amount of tax you owe. Your funds grow tax-deferred until you withdraw them in retirement.
- Roth 401(k) and 403(b) retirement plans: Roth 401(k) retirement plans don't offer deductible contributions but do allow tax-free interest and capital gains while your money grows, and offer tax-free withdrawals in retirement.
- Traditional and Roth IRAs: As with employer-based retirement plans, traditional and Roth IRAs earn interest (and gains) tax-deferred or tax-free while the money grows in your account. Traditional IRA contributions are tax deductible; Roth IRA withdrawals are tax-free. In 2025, IRA contributions are limited to $7,000, or $8,000 if you're age 50 or older.
- Health savings accounts (HSAs): If you have a qualifying high-deductible health plan, you can make tax-deductible contributions to an HSA and use your account to cover out-of-pocket health care expenses, health insurance deductibles and copays. Any interest you receive on your HSA balance is tax-free, as are qualified withdrawals.
- 529 education plans: When you save money for college in a tax-advantaged 529 plan, your interest and gains aren't taxed as your money grows. You don't get a tax deduction on your contributions but can withdraw your money tax-free as long as it's used for qualifying educational expenses.
Learn more: Best Ways to Lower Your Taxes
The Bottom Line
Tracking, reporting and paying taxes on interest income isn't difficult: Save your 1099-INTs, report taxable interest on your Form 1040 and complete your tax return. Going forward, you can consider funneling some of your savings into tax-advantaged accounts to save a few dollars on taxes and meet your long-term savings goals.
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Gayle Sato writes about financial services and personal financial wellness, with a special focus on how digital transformation is changing our relationship with money. As a business and health writer for more than two decades, she has covered the shift from traditional money management to a world of instant, invisible payments and on-the-fly mobile security apps.
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