The IRS views interest on a savings account as earned income, whether it's $1 or $1,000.
So, if you received interest on a high-yield savings account in 2024, you need to report it when you file your federal tax return for the 2024 tax year.
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Is savings account interest taxed?
If you have a savings account that earned interest, you are required to report it to the IRS, like you would with any other form of income.
For example, if you have $10,000 in a high-yield savings account earning 4%, you'd earn $400 in interest for the year. When filing your return, you'd report the $400 as income and it's taxed based on your federal income tax bracket, which ranges from 10% to 37%.
If the interest was $10 or more, your bank or financial institutions will send you a Form 1099-INT with all the relevant information by Jan. 31. But even if you earned less than $10 and don't receive a 1099-INT, you still need to report the interest as income.
Even if you don't withdraw the interest, it is still considered taxable. This also applies for any sign-up bonuses offered.
The principal you deposited is not taxed, however.
What kind of savings accounts are taxed?
Most savings accounts that earn interest are taxed.
- Traditional savings accounts
- High-yield savings accounts
- Money market accounts
- Certificates of deposit
- Interest-bearing checking accounts
If you want to earn high interest on your savings account, the LendingClub LevelUp Savings offers an attractive APY and comes with no fees and no minimum balance requirement.
LendingClub LevelUp Savings Account
Annual Percentage Yield (APY)
4.00% (with monthly deposits of $250 or more), or 3.00%
Minimum balance
None
Monthly fee
None
Maximum transactions
Excessive transactions fee
None
Overdraft fees
N/A
Offer checking account?
Yes
Offer ATM card?
Yes
Terms apply.
Pros
- Strong APY
- No minimum balance required
- No monthly fees
- Free ATM card and no ATM fees
Cons
- At least a $250 monthly deposit required to earn the highest APY
- No physical branch locations
The *American Express® High Yield Savings Account also offers a solid APY with no minimum balance requirements or monthly fees.
*There is no minimum balance required to open your Account, to avoid being charged a fee, or to obtain the Annual Percentage Yield (APY) disclosed to you
American Express® High Yield Savings Account
Annual Percentage Yield (APY)
3.10% APY as of 5/19/2026
Minimum balance
Min balance to open = $0
Monthly fee
$0
Maximum transactions
No limits
Excessive transactions fee
$0
Overdraft fee
$0
Offer checking account?
No
Offer ATM card?
No
Terms apply.
American Express National Bank is a Member FDIC.
Pros
- Strong APY
- Min deposit / Min balance = $0
- $0 monthly fees
- 24/7 customer support
- Helpful "Tips & Tools" section on website
Cons
- Higher APYs offered elsewhere
- No option to add a checking account
- No ATM access
- You can't deposit a check via the mobile app
The Annual Percentage Yield (APY) as advertised is accurate as of 5/19/2026. Interest rate and APY are subject to change at any time without notice before and after a High Yield Savings Account is opened. Interest Rate and APY of a Certificate of Deposit account is fixed once the account is funded
There is no minimum balance required to open your Account, to avoid being charged a fee, or to obtain the Annual Percentage Yield (APY) disclosed to you
For purposes of transferring funds to or from an external bank, business days are Monday through Friday, excluding federal holidays. Transfers can be initiated 24/7 via the website or phone, but any transfers initiated after 7:00 PM Eastern Time or on non-business days will begin processing on the next business day. Funds deposited into your account may be subject to holds. See the Funds Availability section of your Consumer Deposit Account Agreement and Savings Schedules for more information.
How to reduce the tax burden on savings accounts
There are ways to minimize or defer the taxes you have to pay on savings account interest. One way is to invest in a tax-deferred account, like a traditional IRA, Roth IRA or a 401(k).
A Roth IRA allows you to contribute after-tax dollars and while you don't get an immediate tax break, you won't owe taxes on qualified withdrawals in retirement. Some of the best Roth IRA options are offered by Charles Schwab, Fidelity, Ally Bank and robo advisors Wealthfront and Betterment.
Fidelity Investments
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance for robo-advisor to start investing.
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over, which includes access to unlimited 30-minute coaching calls with a Fidelity advisor and tax-loss harvesting on taxable accounts).
Bonus
None currently. Check Fidelity's promotions page for the latest offers here.
Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®
Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Terms apply.
Pros
- No commission fees for stock, ETF, options trades
- No transaction fees for over 3,400 mutual funds
- Fidelity Go® portfolios use Fidelity Flex® mutual funds with zero expense ratios
- Human advisors manage day-to-day Fidelity Go® portfolio decisions
- Unlimited 30-minute coaching calls with a Fidelity advisor for accounts of $25,000 and over (at no extra cost)
- Tax-loss harvesting available on taxable Fidelity Go® accounts with $25,000 or more
- Abundant educational tools and resources with research from 20-plus independent providers
- 24/7 customer service
- Over 100 brick-and-mortar branches across the U.S. for face-to-face support
Cons
- Fidelity Go® has a 0.35% advisory fee per year for balances of $25,000 and over
- Fidelity Go® invests only in Fidelity Flex® mutual funds (no third-party ETFs or individual securities available)
- No socially responsible or ESG portfolio option through Fidelity Go®
- Some of Fidelity's mutual funds require reaching specific thresholds
- Reports of platform outages during heavy trading days
Betterment
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn't require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.
Fees
Fees may vary depending on the investment vehicle selected, account balances, etc. Base price is $5/month for investing accounts; automatically switches to 0.25% annually once you reach $24,000 in total balance or set up $200/month in recurring deposits. Premium plan is 0.65% annually.
Investment vehicles
Robo-advisor: Betterment Digital Investing IRA: Betterment Traditional, Roth and SEP IRAs 401(k): Betterment 401(k) for employers
Investment options
Stocks, bonds, ETFs and cash
Educational resources
Betterment's resources hub offers expert-written guides on investing basics, retirement planning and personal finance that are designed to help investors at every level make more informed decisions.
Terms apply. Does not apply to crypto asset portfolios.
Pros
- No trade or transfer fees
- Automated investing with portfolios built around your financial goals, timeline and risk tolerance
- Assign specific goals to each portfolio and invest using different strategies
- Quick and easy account setup with the ability to sync external retirement accounts
- Advanced features include automatic rebalancing, tax-loss harvesting and socially responsible investing
- Premium plan users ($100,000 minimum) get unlimited access to certified financial planners (CFPs)
Cons
- $5/month fee for investing accounts (switches to 0.25% annually once you hit $200/month in recurring deposits or $24,000 in total balance)
- Premium plan requires a $100,000 minimum balance
Interest earned on funds in a 529 plan is also untaxed, provided the money is used for educational purposes. Invest529 is a direct-sold college savings plan from Virginia that's available to residents of any state. It offers low fees, a wide range of investment options and you only need $10 to get started.
Invest529 (Virginia)
Minimum opening balance
$10
Maximum overall contribution
$550,000
Portfolio options
Options include target enrollment portfolios (also known as age-based portfolios), index portfolios, target risk portfolios, principal protected portfolios and specialty portfolios
Underlying funds
Investors can choose funds from Vanguard, Invesco, Blackstone, UBS and more
Fees and expenses
Total asset-based expense ratio: 0.0% to 0.569%
Terms apply.
Pros
- Available to residents of any state
- Offers low fees
- Diverse investment options
- Tax benefits for residents
Cons
- Minimum opening balance, but it's low
- Expense ratios may be higher compared to other providers on our list
- Doesn't offer online gifting portal for easy sharing
New York's 529 College Savings Program is another direct-sold plan. Available to residents nationwide, it leverages Vanguard mutual funds and has no minimum contribution requirement. It comes with low fees and plenty of investment options, and New York residents are eligible for a state tax deduction for their contributions.
New York's 529 College Savings Program
Minimum opening balance
None
Maximum overall contribution
$520,000
Portfolio options
Options include age-based options and individual options
Underlying funds
Investors can choose funds from Vanguard mutual funds
Fees and expenses
Total asset-based expense ratio: 0.12%
Terms apply.
Pros
- Available to residents of any state
- Offers low fees
- Diverse investment options
- Tax benefits for residents
- No minimum contribution to start
- Offers gifting platform that allows gift-givers to save profile for recurring or future contributions
Cons
- Performance is lower than others on list
Health Savings Accounts (HSAs) are another good way to keep more of your money: They're typically offered by your employer to help defray the cost of health care expenses. HSA contributions are tax-deductible and the funds grow tax-free.
If you use the money for qualified medical expenses, withdrawals are also tax-free. After age 65, you can withdraw money from an HSA for any reason — if it's not for a qualified medical expense you'll have to pay regular income tax on it but not the 20% penalty that applies to withdrawals before age 65.
While HSAs are most commonly offered through your workplace, you can also open one yourself. We recommend Lively and HealthEquity as top options for DIY HSAs.
HealthEquity HSA SMALL
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. There is no minimum balance to participate in HealthEquity's cash account. In order to invest in mutual funds, your HSA cash balance must meet a minimum threshold of $1,000.
Fees
Fees may vary depending on the investment vehicle selected, account balances, etc. Click here for details.
Products
HSA: Health Savings Account (HSA) FSA: Flexible Spending Account (FSA) HRA: Health Reimbursement Arrangement (HRA) Brokerage and trading: Mutual funds Other: Dependent Care, Commuter, Lifestyle, COBRA, Direct Billing, Premium Only Plans
Investment options
HealthEquity offers access to 3 options for investing in mutual funds: AutoPilot, GPS and Self-driven
Educational resources
HR insights, case studies, and industry-leading in-depth research covering HSAs, FSAs and other popular benefits.
Terms apply.
Lively HSA SMALL
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. There are no minimum balance fees for a Lively HSA.
Fees
Fees may vary depending on the investment vehicle selected, account balances, etc. Click here for details.
Products
HSA: Health Savings Account (HSA) FSA: Flexible Spending Account (FSA) HRA: Health Reimbursement Arrangement (HRA) Brokerage and trading: Schwab Health Savings Brokerage Account and HSA Guided Portfolio Other: Lifestyle Spending Account (LSA), Medical Travel Account (MTA) and COBRA & Direct Bill.
Investment options
Investments available through Schwab Health Savings Brokerage Account and HSA Guided Portfolio
Educational resources
Extensive tools, calculators, and industry-leading, in-depth research covering HSAs, FSAs, HRAs, Lifestyle Spending, Medical Travel Accounts and other health and wellness resources.
Terms apply.
Taxes on savings accounts FAQs
How much interest can you earn without reporting it to the IRS?
Any interest earned in a traditional or high yield savings account must be listed on your tax return, whether it's $1 or $1,000. If you earn at least $10 interest, your financial institution should send you a Form 1099-INT. But even if you don't get the form. The IRS is unlikely to pursue action for a small amount of interest, but if it discovers you didn't report it, you could face fines.
Are HYSAs safe?
High-yield savings accounts are insured up to $250,000 by either the Federal Deposit Insurance Corporation or the National Credit Union Administration. So your money is as safe as it would be in a traditional savings account.
How do I avoid paying taxes on my savings account interest?
Unless your total income falls below the federal income tax filing threshold, you're required to pay taxes on interest earned from savings. However, you can lessen the tax burden by opening a tax-advantaged account like a Roth IRA or a health savings account (HSA).
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