Bank bonuses are taxable as income, so taking advantage of promotional offers could result in a surprise tax bill if you don't plan ahead. But since bank bonuses can be lucrative, allowing you to earn hundreds of dollars with little effort, they can be well worth the effort. How much you can expect to pay in taxes will depend on your income and the amount you'd stand to gain from the bank bonus.

How Are Bank Bonuses Taxed?

"Get $250 for opening a new account!" You've likely seen 澳洲幸运5开奖号码历史查询:bank bonuses and promotions advertised by credit unions and banks. As financial institutions compete for customers, they often use bonus offers to encoꦰurage individuals to open new accounts. 

Although bank bonuses are relatively easy to earn, they are still considered income; as a result, you'll have to pay taxes on the bonus amount. Depending on the financial institution and the amount of the bonus, the bank may send you a Form 1099-INT, Interest Income, or a Form 1099-MISC, Miscellaneous Information, with the bonus amount listed on it. You'll use this form to report the bonus on your income tax return.  

The way the bonus is taxed depends on your 澳洲幸运5开奖号码历史查询:income tax bracket. As your income grows, you may enter a higher tax bracket, but that doesn’t mean you pay the higher tax rate on your entire income. Instead, you pay each tax rate on the income within that bracket. For a single taxpayer, the following brackets apply in 2024: 

For example, let's say your income is $47,500, and you earn $500 in bank bonuses, bringing your total taxable income to $48,000.

The following 澳洲幸运5开奖号码历史查询:tax brackets would apply for 2024: 

• 10% on the first $11,600
• 12% on the next $35,550
• 22% on the remaining $850

If you receive your bonus in 2025, here are the tax brackets for a single taxpayer in 2025.

Using the earlier example, your income is $47,500, and you earn $500 in bank bonuses for a tot🐎al taxable income of $48,000.

The following tax bracket🌳s would apply for 2025: 

• 10% on the first $11,925
• 12% on the next $36,550

In general, setting aside 10% to 35% of your bonus amount will allow you to comfortably cover the tax bi⛦ll resཧulting from the bonus. 

How to Repo🌜rt a Bank Bonus: Form 1099-INT and Form 🐷1099-MISC

While credit card bonuses are viewed as rebates—and, therefore, are not subject to income tax—bank bonuses, such as those awarded for 澳洲幸运5开奖号码历史查询:opening a new checking account and meeting requirements, are taxable as income. The bank or credit union will typically report the bonus amount and will send you either 澳洲幸运5开奖号码历史查询:Form 1099-MISC or 澳洲幸运5开奖号码历史查询:Form 1099-INT. When you receive the form, you shouldꦅ enter the amount listed on it on your personal income tax return. 

Not all financial institutions report bank bonuses, so you may not receive a form from your bank. However, the bonus is still taxable as income even if you didn't get a form. You'll have to self-report the bonus amount; to do so, enter the dollar amount on your 澳洲幸运5开奖号码历史查询:Form 1040 under "other income." 

The Bottom Line

Bank bonuses can be an easy way to earn extra money simply for opening and funding a new checking or 澳洲幸运5开奖号码历史查询:savings account. Howev🎉er, the money isn't wholly free of strings. Bank ♐bonuses are taxable as income and, if you don't set money aside, could result in a surprise at tax time. To avoid any issues, set aside a portion of your bonus to cover the resulting taxes.