CD and Savings Interest: What You Keep After Tax
With rates on CDs and high-yield savings accounts well above where they were a few years ago, plenty of people are parking cash there. What often gets overlooked: this interest is fully taxable as ordinary income, reported on Form 1099-INT, and taxed at your marginal federal rate plus state tax in most states. Unlike qualified dividends, there's no preferential rate, so a headline 5% APY can shrink fast.
This calculator takes your deposit, rate, term, and tax rate to walk through gross interest, tax owed, and your true net after-tax interest. Your actual rate depends on total taxable income and state, and holding the account inside an IRA changes the tax treatment entirely. Treat the results as estimates and check your official 1099-INT for exact figures.
Frequently Asked Questions
Yes, it's taxed as ordinary income at the federal level and usually the state level too, reported on Form 1099-INT.
Use your marginal tax bracket, combining federal and state rates if your state taxes income.
Interest earned inside a traditional or Roth IRA is tax-deferred or tax-free instead of taxed each year.