Yes. A new savings account's sign-up bonus counts as taxable income in the year the bank credits it to your account, no matter what the bank calls it.
The Points Guy explains that the IRS treats the bonus as ordinary income whether the bank labels it "interest" or a "reward" for opening the account. That holds true even for a one-time $200 or $300 promotion that never shows up as interest on your statement. The label the bank uses matters for its own paperwork, but not for your tax bill.
Table of Contents
- Why the Bank's Label Doesn't Change the Tax Treatment
- How the Bank Reports Your Bonus
- What Happens If the Bank Never Sends You a Form
- Where to Report the Bonus on Your Tax Return
- Budgeting for the Tax Hit
- What Happens If You Skip Reporting It
- Frequently Asked Questions
Why the Bank's Label Doesn't Change the Tax Treatment
Banks dangle cash bonuses to pull in new depositors, and the money is real income the moment it lands in your account. The IRS doesn't care whether the bank frames the payment as "interest earned" or a "welcome bonus" — The Points Guy cites the IRS's own Form 1099-INT instructions, which treat both the same way for reporting purposes.
That instruction form covers two categories: actual interest, and any amount paid "other than interest" on a deposit account. A cash bonus for opening the account falls into that second bucket, which is why it ends up taxable even though you didn't "earn" it the way you earn interest on a balance.
How the Bank Reports Your Bonus
Most banks report a savings bonus on Form 1099-INT, the same form that reports your ordinary interest earnings, once the combined total of interest and other payments reaches $10 or more in a calendar year. The IRS's Form 1099-INT instructions, as cited by The Points Guy, set that $10 threshold specifically for deposit accounts.
Some institutions instead issue Form 1099-MISC for the bonus, particularly when the payment is tied to an action — opening the account or referring a friend — rather than to the account balance itself. BankersOnline notes this split in how banks classify these payments. That distinction matters because the two forms have historically carried different reporting thresholds, and a change arriving in 2026 widens the gap: So a $300 bonus reported on 1099-INT still triggers a form at the $10 level, while the same bonus reported on 1099-MISC may not generate any paperwork at all once the $2,000 threshold takes effect.
- Form 1099-INT: issued for $10 or more in interest or other deposit-account payments, unchanged.
- Form 1099-MISC: under the One Big Beautiful Bill Act, the reporting threshold rises from $600 to $2,000 for payments made starting in 2026, with annual inflation adjustments beginning in 2027, according to CPA Practice Advisor.
What Happens If the Bank Never Sends You a Form
A bank bonus is taxable whether or not you ever receive a 1099. BankBonus.com co-founder Matt Bundrick, quoted by The Points Guy, makes the point directly: the reporting threshold determines the bank's filing obligation, not your obligation to report the income.
In practice, this comes up most often with smaller bonuses or ones reported on 1099-MISC, where the 2026 threshold change means more bonuses under $2,000 will arrive with no form at all. If your bonus falls below the threshold that applies to it, don't assume that means it's tax-free — it simply means the bank isn't required to tell the IRS about it. You're still required to tell them yourself.
Where to Report the Bonus on Your Tax Return
Where the bonus goes on your return depends on which form, if any, the bank used. IRS Schedule 1 lays out both paths: Either way, the income lands on your return — the form number just determines which line it goes on.
- If it's reported on Form 1099-INT: enter it on Form 1040, Line 2b. If your total interest for the year (including the bonus) exceeds $1,500, you'll also need to file Schedule B.
- If it's reported on Form 1099-MISC, or you received the bonus with no 1099 at all: report it as "Other income" on Schedule 1, Line 8z, which then flows through to Form 1040.
Budgeting for the Tax Hit
Banks don't withhold any tax from a sign-up bonus before crediting it to your account. That means the full amount is taxed at your ordinary marginal income tax rate, and The Points Guy warns that this can leave recipients owing more than they expected at filing time if they spend the bonus without setting money aside.
A simple way to plan for this: set aside roughly your marginal tax rate's worth of the bonus — for example, 22% of a $300 bonus is $66 — in a separate account until you file. That way the bonus doesn't quietly inflate your tax bill. It's also worth checking whether the bank sent the bonus on a 1099-INT or 1099-MISC, since that determines which line of your return it lands on and whether it counts toward the $1,500 Schedule B threshold alongside your regular interest income.
What Happens If You Skip Reporting It
If the bank files a 1099 for your bonus and you leave that amount off your tax return, the IRS's automated matching program compares what the bank reported against what you filed. The Points Guy notes that a mismatch can trigger an IRS notice.
That risk applies whenever a form was actually filed — a bonus large enough to clear the 1099-INT $10 threshold, or a 1099-MISC bonus that still falls under the new $2,000 threshold in a given year. Reporting the bonus yourself, even when no form arrives, avoids any chance of that mismatch down the line.
Frequently Asked Questions
Does a small bonus under $10 still count as taxable income?
Yes. The $10 figure only decides whether the bank must send you a Form 1099-INT; your duty to report the income applies regardless of the amount, per The Points Guy.
Will the 2026 threshold change mean fewer bonuses get reported to the IRS?
It applies only to Form 1099-MISC, where the threshold rises from $600 to $2,000 starting in 2026, per CPA Practice Advisor. The $10 threshold for Form 1099-INT, which covers most savings account bonuses, stays the same.
Do I need Schedule B if my only interest income is the bonus?
Only if your total interest, including the bonus, exceeds $1,500 for the year, per IRS Schedule 1 instructions.
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