Are Bank Bonuses Taxable? 1099-INT, 1099-MISC and State Tax

This chapter is information, not tax advice. We cannot tell you what you owe, and a tax professional can apply these rules to your situation.

The bonus-versus-savings tax math for ordinary interest lives in our guide to taxes on high-yield savings interest. It covers the 1099-INT you get for interest and when to expect it. This chapter asks one narrower question: what is the after-tax value of a signup bonus, and what does the tax form change about that. A separate guide covers wage and employer bonuses, which are taxed through payroll and are a different subject.

What tax question do you have?

• You earned a bonus and no form has arrived. Read the section on what the form does and does not change. The short answer is that the obligation does not wait for the paperwork.
• You are deciding whether a bonus is worth chasing. Jump to the after-tax table. It gives the figure to carry into the chapter on bonus versus savings and the chapter on hourly value.
• You want to know what your state adds. The state table shows how much it moves the number, and where we could not confirm how a bonus is treated.

Is a cash bank bonus taxable?

Generally yes. The IRS counts nearly all money you receive as taxable income unless a law says otherwise. The federal definition of gross income is all income from whatever source derived, in cash or other property (26 CFR 1.61-1(a)). A cash bonus is money you received, and we found no IRS page that excludes it.

Interest is a separate case, and it is the closest comparison. A federal rule says interest received by or credited to a taxpayer is gross income (26 CFR 1.61-7(a)). IRS Topic 403 adds that most interest credited to an account you can withdraw from without penalty is taxable in the year it becomes available to you. We use these only as the interest-side parallel. None of them says a cash bonus is interest.

What the sources do not say matters as much. IRS Publication 550 (2025) has a passage headed "Gift for opening account." It covers noncash gifts or services, with a $10 value line for deposits under $5,000 and a $20 line for $5,000 or more. It does not mention cash bonuses. So we say only what the sources support: a cash bonus is generally taxable income.

Whichever label a bank uses, the bonus lands on top of your other income. It is taxed at your marginal rate, which is the rate on your next dollar of taxable income. Taxable income is what is left after your standard or itemized deduction.

What does the 1099 form change, and what does it not?

A Form 1099 is the statement a bank files with the IRS and sends you to show what it paid. The form is how the bank tells you and the IRS about the payment. It is not what makes the money taxable.

What the IRS text we read says. The instructions for Form 1099-INT (revised January 2024) describe interest income in Box 1 and do not mention account-opening bonuses. The instructions for Forms 1099-MISC and 1099-NEC do not mention them either. Neither text says which form a bank must use for a cash bonus, so we cannot tell you which form you will get.

What the Form 1099-INT instructions do say. Our deposit guide on bonuses after tax notes that the Form 1099-INT instructions tell payers to include amounts credited to an account whether or not they are called interest. The institutions those instructions list are thrift-type banks and credit unions, not every bank, so it does not settle the question for every bank.

What offer terms show. Banks differ. In five offers we checked on October 5, 2026, two said the bonus is reported on a 1099-INT and one said 1099-MISC. One said it may be reported on a Form 1099, and one said it is reported as income. That is a sample of five offers on one date, not a pattern, and it is the reason for the rule below.

The rule: check the form you receive. A bonus can be reported on a 1099-INT, a 1099-MISC or another statement. The amount printed, the box it sits in and the payer's name are what you reconcile against your own records.

What the form does not change.

1. The obligation. The gross income rule (26 CFR 1.61-1(a)) does not depend on a form. For interest, Topic 403 and Publication 550 say it must be reported even if you do not receive a Form 1099-INT. Reporting thresholds describe when a payer must file a form with the IRS, not when you must report.
2. The tax rate. A dollar of bonus is taxed at your marginal rate whichever form reports it. Federally, it lands in the same place as a dollar of savings interest.
3. Which tax year it counts in. The posting date, not the form date, generally tells you the tax year. Some offer terms say the bonus can arrive weeks after you meet the requirement, so a bonus earned in December can post in January. If your case is close to year end, ask a tax professional.

What the form can change. It can change where on your return the amount is typed and which statement you reconcile. Which place on your return a particular bonus belongs depends on how it was reported to you, so we do not assign one here. The form instructions or a preparer can tell you.

What are the reporting thresholds, and why do they not let you off?

A bank must file a Form 1099-INT for $10 or more of interest, or $600 or more of interest paid in the course of a trade or business. Backup-withholding and foreign-tax cases apply regardless of amount. For Form 1099-MISC, the IRS instructions page we read showed a $2,000 threshold for Box 3 other income, so confirm the current figure on the IRS page. A small bonus below a payer's threshold may produce no form at all, and the income is still reportable.

What is a $300 bonus worth after federal tax?

Federal tax is charged on taxable income, which is your income after the standard or itemized deduction, not on gross pay. The 2026 brackets below come from the IRS announcement of Revenue Procedure 2025-32. The standard deduction for 2026 is $16,100 for a single filer, $32,200 for married filing jointly and $24,150 for head of household. Your bonus is taxed at the bracket your last dollar of taxable income falls in.

Bank A pays a $300 bonus. The table treats the whole $300 as ordinary income at one federal rate and adds no state tax.

The $228 row matches the default of the direct deposit bonus breakeven calculator, which uses a 24% rate. The calculator does not include state tax.

When the bonus straddles two brackets

The table assumes the whole bonus falls in one bracket. It need not. Suppose a single filer has $50,200 of other taxable income. The 12% bracket ends at $50,400, so $200 of the $300 is taxed at 12% ($24) and the other $100 at 22% ($22). Tax is $46 and the filer keeps $254. Using a flat 22% would say $66 and $234, and a flat 12% would say $36 and $264. The flat-rate table is a fast estimate; it is not your return.

What does state tax add?

We checked seven states on primary state sources on October 5, 2026. Yours may differ. Every other state is omitted because we did not research it, and New Hampshire is omitted because its revenue pages could not be read. The table adds a second rate to a 22% federal rate, a single example, on a $300 bonus. The figures reflect the tax year shown for each state; several rows use 2025 state booklets because the 2026 ones were not out.

How to read it.

• Texas and Florida. Texas lists no state income tax. Florida's constitution limits any state tax on a resident's income to amounts creditable against federal tax, so no separate state rate applies here.
• Flat-rate states. Pennsylvania taxes interest as a class of income per the state's tax guide; whether it treats a bonus the same way was not read. For Illinois and Colorado we confirmed the rate, and Colorado's rate is the 2025 rate because the 2026 booklet was not out. We did not read a page that says how any of the three states treats a bank bonus, so the table applies the rate as if the bonus were ordinary income. Check your state's instructions.
• Graduated states. California and New York have several brackets, so one number would mislead. The rows use a single-filer example bracket: 9.3% in California for taxable income above $72,724 up to $371,479, and 5.5% in New York for income above $13,900 up to $80,650. Your bracket may differ. We do not model California's additional tax on very high incomes, New York City or Yonkers tax, or any other local tax.

The model also adds the federal and state rates together. That ignores any federal deduction for state tax, extra federal taxes that apply at high incomes, and your actual bracket, which only you or a preparer can establish. Use the table to size the effect, not to file.

How does this connect to the savings comparison?

Savings interest is ordinary income too. A bonus of $300 and $300 of savings interest each leave $234 at a 22% federal rate and no state tax. So the tax does not change which side of the crossover pays more unless the two are taxed at different rates, which they are not in the model used here. What the tax does is shrink both sides together, which is why the chapter on bonus versus savings can be run before tax and then scaled. Carry the after-tax figure from this chapter into the chapter on hourly value.

What should you keep and check?

1. The amount and the date it posted. Take them from your statement, not the offer page.
2. The form you receive. Note whether it is a 1099-INT, a 1099-MISC or another statement, and which box carries the bonus.
3. A note of your own rates. Write down your federal marginal rate and your state's rate so the number you carry into the plan is yours.
4. Whether a form arrives for an account you already closed. A bank may send a form for the year the bonus posted even if the account is gone. Keep your closing records.

Limits of this guide. This is education, not tax advice. We checked seven states, and for none of the five with an income tax did we read how a bank bonus is treated. We did not read Revenue Procedure 2025-32 itself, only the IRS announcement of it, and we did not model local taxes. A tax professional should settle the state-table wording for your case.