Who Pays Taxes on Interest Earned on a Joint Bank Account?

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Sharing a bank account with a partner or relative can make it easier to manage your money together. But it can also lead to some confusion during tax season.

You must report and pay taxes on the interest you earn on a deposit account. How does this work when you co-own an account? Read on to find out.

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Who pays taxes on interest earned on a joint bank account?

The interest you earn on most standard bank accounts is taxable. That includes checking and savings accounts, CDs, corporate bonds and deposited insurance dividends. When you earn interest on a joint bank account, all bank account owners must pay taxes on their portion of it.

“So if the joint account is owned by four owners equally, each would pay taxes on 25% of the interest earned in the account during the year,” said Logan Allec, CPA and owner of tax relief company Choice Tax Relief.

How to know how much interest you’ve earned

Your bank or credit union should send you a Form 1099-INT showing any interest your account earned over $10. But you must report any amount of interest you earn on a deposit account, even if it’s less than $10. You can check your account statements to see how much the account has earned over the tax year.

Not every account owner may receive this form. The bank will generally send a Form 1099-INT to the primary account holder for the entire amount of the interest earned during the year, Allec said.

If you’re the primary account holder and get this form, you’re responsible for telling the other account holders how much interest the account earned over the year and what portion of this interest they should report.

To do this, you’ll fill out a Form 1099-INT for each joint owner detailing the interest earned and their percentage responsibility. You can find specific instructions on how to fill out a 1099-INT on the IRS website. Once you’ve filled out a 1099-INT for each joint account holder, you’ll give this form to the account holder so they can use it to file their taxes. 

The process is different if you’re married and filing jointly. (More on that below.)

How to report interest earned on a joint account

Primary account holders must do more work when reporting interest on a joint bank account but all joint owners follow a similar process.

“On their own tax return, the primary account holder should report the total amount reported on the Form 1099-INT and then subtract the other owners’ proportionate shares of the interest as a ‘nominee distribution,'” Allec said. This shows that not all the interest income from the joint account belongs to you, so you’ll only pay taxes on your share.

All account holders must note the nominee distributions when they file individual tax forms. If you make $1,500 or less in total interest or dividend income for 2025, you can write your interest income on the appropriate line of your Form 1040. If you earned more than $1,500, you’ll need to fill out Schedule B and attach it to your 1040. Here’s how:

1. Write in the total interest earned on the account.
2. Write in the nominee distribution.
3. Subtract the taxable interest that doesn’t belong to you.

This process will differ if the joint account owners are also married spouses who file jointly. 

“If you own a joint bank account only with your spouse, and you and your spouse file jointly, you don’t have to worry about any of the nominee distribution issues since your and your spouse’s income are all combined anyway on your joint tax return,” Allec said.

What’s the tax rate for joint bank account interest?

The amount of taxes you pay depends on your tax bracket. 

“Interest in a taxable account is generally taxed as ordinary income, meaning that it’s subject to the same tax rates that you pay on your wages,” said Allec. 

Here’s the tax rate you can expect to pay on your interest earnings for the 2024 tax year based on your income.

If you’re a single filer or married filing separately:

• $0 – $11,600: 10%
• $11,601 – $47,150: 12%
• $47,151 – $100,525: 22%
• $100,526 – $191,950: 24%
• $191,951 – $243,725: 32%
• $243,726 – $609,350: 35%
• $609,351 and up: 37%

If you’re married filing jointly:

• $0 – $23,200: 10%
• $23,201 – $94,300: 12%
• $94,301 – $201,050: 22%
• $201,051 – $383,900: 24%
• $383,901 – $487,450: 32%
• $487,451 – $731,200: 35%
• $731,201 and up: 37%