CD Calculator

As ordinary income at your marginal federal rate, exactly like wages, plus state income tax if your state taxes interest. It does not qualify for the lower long-term capital gains rates. The bank reports it to you and the IRS on Form 1099-INT.

No. Interest is ordinary income, so the 0%, 15%, and 20% long-term capital gains rates do not apply. The one exception is a brokered CD sold on the secondary market before maturity: the change in price between purchase and sale is a capital gain or loss, while the interest it paid remains ordinary income.

Usually yes. Interest is taxable in the year it is credited or made available to you. A multi-year CD that pays out only at maturity generally still creates taxable interest each year under the original issue discount rules, so you can owe tax on interest you cannot withdraw without a penalty.

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming have no individual income tax. Washington taxes certain long-term capital gains but not interest. New Hampshire repealed its Interest and Dividends Tax for tax periods beginning after 31 December 2024. Everywhere else, CD interest is generally taxable as ordinary income.

No, and the difference is worth money. Interest on U.S. Treasury bills, notes, and bonds is exempt from state and local income tax; bank CD interest is not. In a state with a high income tax, a Treasury bill at the same headline yield can beat a CD after tax.

It can. Interest is net investment income, so the surtax applies to the lesser of your net investment income or the amount your modified adjusted gross income exceeds $200,000 filing single or $250,000 filing jointly. The thresholds are not indexed for inflation, so they catch more filers over time. The calculator has a toggle for it.

Yes. It appears in box 2 of Form 1099-INT and is deducted as an adjustment to income on Schedule 1 of Form 1040. You can take it whether or not you itemise, and you can take it even when the penalty exceeds the interest the CD paid.

In a traditional IRA the interest is tax-deferred and withdrawals are taxed instead. In a Roth IRA qualified withdrawals are tax-free. Either way there is no annual 1099-INT and no yearly tax drag, so the per-year tax figure in this calculator does not apply.

Yes. Renewing is not a tax-deferred exchange. The interest was credited and available to you at maturity, so it is taxable for that year even if you never moved it.

If the bank paid you $10 or more of interest during the year, generally by 31 January. Below $10 many banks issue nothing, but you are still required to report the interest.

The form goes out under the primary holder's taxpayer identification number, but the tax follows actual ownership. Joint owners filing separately report their own share, and the person who received the form may need to issue a nominee Form 1099-INT for the other owner's portion.

Possibly. Nothing is withheld from CD interest by default, so a large balance can trigger an underpayment penalty even if you settle up at filing. The usual safe harbours are paying in at least 90% of this year's tax or 100% of last year's, 110% at higher incomes.

If the bank does not have a correct taxpayer identification number for you, or the IRS notifies it that you underreported interest, it must withhold 24% of your interest and remit it. It is a prepayment credited on your return, not an additional tax.

The interest rate is the nominal annual rate before compounding; APY is what a balance actually grows by over a year once compounding is included, so APY is always at least as high as the rate. Because APY is standardised, it is the only fair way to compare two CDs. This calculator takes APY for that reason.

Yes. Interest paid out leaves the CD and stops earning, turning compound interest into simple interest. On $10,000 at 4.5% APY for five years, compounding to maturity pays about $2,462 against roughly $2,205 taken monthly, a gap of about $257. Monthly income is still the right choice if you need the cash flow, and the calculator shows exactly what it costs.

The short window after maturity, commonly seven to ten calendar days, in which you can withdraw, add funds, or change the term without an early withdrawal penalty. Some banks give as little as one day on short terms, so read the disclosure instead of assuming.

The CD almost always renews automatically for the same term at the bank's current rate, which is often well below the promotional rate that attracted the deposit. After renewal, getting out usually means paying the early withdrawal penalty on the new term.

The bank sets it. Typical structures run from about three months of interest on short terms to six or twelve months on multi-year CDs, with a federal floor of seven days' simple interest inside the first six days. Because the penalty is measured in interest rather than as a percentage of the balance, an early exit can cost more than the CD earned and reduce your principal.

Yes, to $250,000 per depositor, per insured bank, for each ownership category; credit union share certificates have equivalent NCUA coverage. Brokered CDs pass through to the issuing bank, so several from the same bank can share a single limit.

In nominal terms, essentially only through an early withdrawal penalty larger than the interest earned, or by selling a brokered CD below what you paid. In real terms it happens all the time: when the after-tax yield is below inflation the balance rises while its buying power falls, which is what the real-value figure on this page measures.

Roughly inflation divided by the share of interest you keep after tax. At 3.3% inflation and a 30% combined tax rate that is about 4.7% APY just to break even. The calculator computes the break-even figure from your own rates.

Splitting a deposit across several CDs with staggered maturities, for instance equal amounts at one through five years. Something matures every year, so you are never far from your money and you reinvest across several rate environments rather than betting the whole balance on a single date.

A no-penalty CD lets you withdraw after the first few days without a penalty, normally at a lower rate. A bump-up CD lets you take one rate increase during the term if the bank raises its rate. Both trade yield for flexibility, which is worth it when rates may rise and not when they may fall.

No. This is general educational information built on public rules, and the tax rates are editable defaults for the 2025 tax year rather than a filing position. Rates change, states are mid-way through scheduled changes, and individual situations differ. Check anything that matters with the IRS, your state tax authority, or a qualified professional.