{"id":6249,"date":"2024-10-16T07:46:01","date_gmt":"2024-10-16T07:46:01","guid":{"rendered":"https:\/\/finderica.com\/do-you-have-to-pay-taxes-on-your-savings-account-interest\/"},"modified":"2024-10-16T07:46:01","modified_gmt":"2024-10-16T07:46:01","slug":"do-you-have-to-pay-taxes-on-your-savings-account-interest","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=6249","title":{"rendered":"Do You Have to Pay Taxes on Your Savings Account Interest?"},"content":{"rendered":"\n
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\"ScoreCard<\/p>\n

Many savings accounts, certificates of deposit and money market accounts enjoyed sizable interest rate bumps in 2022 as the Federal Reserve edges the target federal funds range higher.<\/p>\n

At the end of 2021, the best high-yield savings accounts earned an average of about 0.5% to 1%. Just over a year later, you can find online banks offering savings accounts with APYs of 3% and higher.<\/p>\n

As long as the Fed keeps raising rates, high-yield savings account rates will keep inching higher.<\/p>\n

But all that interest isn\u2019t free money. You have to pay taxes on savings account earnings.<\/p>\n

Here\u2019s how it works.\n<\/p>\n

Are Savings Accounts Taxable?<\/h2>\n

Interest earned on a savings account is considered taxable income by the Internal Revenue Service. That means you need to report it on your tax return.<\/p>\n

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When you log into your bank account, how do your savings look? Probably not as good as you\u2019d like.<\/p>\n

It always seems like an uphill battle to build (and keep) a decent amount in savings. But what if your car breaks down, or you have a sudden medical bill?<\/p>\n

Ask one of these companies to help\u2026<\/a><\/p>\n<\/div>\n<\/div>\n

This includes interest earned from:<\/p>\n

If you earned $10 or more in interest from your savings account this year, you\u2019ll receive tax form 1099-INT from your bank or credit union.<\/p>\n

How Is Interest Income From Savings Accounts Taxed?<\/h2>\n

Savings account interest is taxed at your marginal tax rate, also known as your earned income tax rate. This can range from 10% to 37%, depending on your tax bracket.<\/p>\n

Here are the 2022 marginal tax rates (used when filing your taxes in 2023) for reference.<\/p>\n

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2022 Marginal Tax Rates <\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n
Tax Bracket<\/th>\nSingle Filer<\/th>\nMarried Couple Filing Jointly<\/th>\n<\/tr>\n<\/thead>\n
10%<\/td>\nUp to $10,275<\/td>\nUp to $20,550<\/td>\n<\/tr>\n
12%<\/td>\n$10,275 to $41,775<\/td>\n$20,550 to $83,550<\/td>\n<\/tr>\n
22%<\/td>\n$41,775 to $89,075<\/td>\n$83,550 to $178,150<\/td>\n<\/tr>\n
24%<\/td>\n$89,075 to $170,050<\/td>\n$178,150 to $340,100<\/td>\n<\/tr>\n
32%<\/td>\n$170,050 to $215,950<\/td>\n$340,100 to $431,900<\/td>\n<\/tr>\n
35%<\/td>\n$215,950 to $539,900<\/td>\n$431,900 to $647,850<\/td>\n<\/tr>\n
37%<\/td>\nOver $539,900<\/td>\nOver $647,850<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n

Your taxable income for the year determines your tax rate for interest income. So if you fall into the 22% tax bracket, all savings account interest gets taxed at 22%.<\/p>\n

Interest earned in 2022 must be reported when you file your taxes in 2023.<\/p>\n

A few things to keep in mind:<\/p>\n