What your savings interest is actually worth
A bank's own rate page can tell you the APY. It cannot tell you what that APY is worth after your own tax bracket takes its share — that depends on your income, not the account.
High-yield savings: common questions
Is interest from a savings account taxed?
Yes. Interest is ordinary income under 26 U.S.C. §61(a)(4), taxed at your marginal federal and state rate the same as your next dollar of salary would be — not at a special lower rate the way long-term capital gains are.
Does savings interest get taxed like a paycheck, including Social Security and Medicare?
No. FICA under 26 U.S.C. §3101 applies only to wages as defined in §3121, and interest is not a wage. This calculator applies your combined federal and state marginal rate only, with no FICA — using the same figure your salary's marginal rate comes from, minus its Social Security and Medicare components.
Why is my effective after-tax rate lower than the advertised APY?
The advertised APY is the account's gross rate before tax. Your after-tax yield is that rate multiplied by (1 minus your combined federal and state marginal rate) — so a 3.40% APY at a 32% combined marginal rate nets roughly 2.31%, before any Net Investment Income Tax that may also apply at higher incomes.
Where do the bank rates come from?
Each bank's own rate page, read directly and cited below with the date. Rates are variable and set by the bank, not by this site — they can change at any time, and the dates shown are when this page's figures were last read, not a live feed.