Are Bank Bonuses Taxable? The 1099-INT Guide

Short answer: yes, bank account bonuses are taxable. The IRS treats the cash you earn for opening an account as interest income — the same bucket as the interest a savings account pays. The good news is that it's straightforward to handle once you know how it works. This guide covers the form you'll get, what to do if you don't get one, how state taxes factor in, and roughly how much to set aside.

Why bank bonuses are taxed as interest

When a bank pays you to open an account, the IRS views it as a return on your relationship with the bank — interest income — rather than a gift or a rebate. That means it's taxed at your ordinary income rate (the same rate as your paycheck), not a lower investment rate. There's no special “bonus tax”; it simply adds to your taxable income for the year.

The Form 1099-INT

If your total interest from a single bank — including the bonus and any account interest — reaches $10 or more in a calendar year, the bank will send you a Form 1099-INT (a few banks use 1099-MISC for bonuses instead). You'll typically receive it by late January, and a copy goes to the IRS. The bonus amount usually appears in Box 1 as interest income, which you carry onto your federal return.

What if no 1099 arrives?

This trips a lot of people up. If your bonus was under the $10 reporting threshold, the bank may not send a form at all — but you still legally owe tax on the income. The reporting threshold is about when the bank must file paperwork, not about whether the money is taxable. Keep your own record of every bonus you earn so you can report it accurately even without a form.

Federal vs. state tax

Your bonus is subject to federal income tax everywhere. Whether you also owe state tax depends on where you live:

• No state income tax (e.g., Texas, Florida, Nevada, Washington, and a handful of others): the bonus is taxed only at the federal level.
• States that tax interest income: the bonus is added to your state taxable income too.

For a note specific to where you live, open your state's bank-bonus page — each one includes how bonuses are treated in that state.

How much should I set aside?

Because it's ordinary income, the tax depends on your bracket. A practical rule of thumb is to set aside 20–30% of each bonus for federal tax, plus a little more if your state taxes interest. If you earn a lot of bonuses in a year, that income isn't withheld like a paycheck — so consider whether you need to make estimated quarterly payments to avoid an underpayment penalty.

A note on brokerage and credit-card bonuses

Brokerage bonuses are generally taxable income, similar to bank bonuses, and may be reported on a 1099-INT or 1099-MISC. Credit card sign-up bonuses earned through spending are usually treated as a rebate and are not taxable — a key difference from bank account bonuses.

Keep good records

The simplest way to stay ahead of tax season is to track every bonus as you earn it: the bank, the amount, and the date it posted. That's exactly what a tracking board is for — so when the 1099s arrive (or don't), you already have the full picture.

Frequently asked questions