Savings tax rate interest
Savings bonds' interest is also subject to federal gift, estate, and excise taxes while at the state level, the tax applies for estates or inheritances. Understanding How Savings Bonds are Taxed Most interest income, including interest on your savings account, is taxed as ordinary income on your federal income tax returns. That means that the higher your tax bracket, the higher the rate you’ll pay on your interest. Unlike long-term capital gains, your interest income isn’t taxed at a lower rate.