📋 Table of Contents
How Money Market Account Interest Is Taxed
Interest earned on a money market account is taxable as ordinary income, just like savings account interest — reported via a 1099-INT if you earn $10 or more during the year.
Money Market Account vs. Fund Tax Treatment
| Product | Tax Treatment |
|---|---|
| Money market account (bank deposit) | Interest taxed as ordinary income |
| Money market fund (investment) | Dividends, may include tax-exempt options (e.g., municipal funds) |
Estimating Your Tax Liability
Multiply your total interest earned by your marginal tax rate to estimate the tax owed — the higher your tax bracket, the more a given interest rate is reduced in after-tax terms.
Money Market Funds and Tax-Exempt Options
Unlike money market accounts, certain money market mutual funds (like municipal money market funds) can offer tax-exempt interest — a different product with different tax treatment, worth understanding if tax efficiency matters to you.
Common Mistakes
Confusing a money market account (bank deposit, always taxable) with a money market fund (investment product, sometimes tax-advantaged) — these are genuinely different products with different tax rules.
Frequently Asked Questions
Yes, for a standard money market account (bank deposit) — interest is taxed as ordinary income. Certain money market funds (a different, investment product) may offer tax-exempt options.
Technically yes — all interest income is taxable regardless of amount, even if it's too small to trigger a 1099-INT form from your bank.