Taxes
Is Savings Account and GIC Interest Taxable in Canada?
Yes: interest from savings accounts and GICs is taxable income in Canada unless it is earned inside a TFSA, RRSP or FHSA. How it is reported, the $50 T5 slip threshold, and how multi-year GIC interest is taxed each year.
Is interest from a savings account taxable in Canada?
Yes. Interest paid or credited to you is taxable income in the year you earn it, and it is taxed at your full marginal rate, with no special treatment like capital gains or dividends get. The exception is interest earned inside a TFSA (never taxed), an RRSP or RRIF (taxed only when withdrawn) or an FHSA (tax-free when used for a qualifying first home).
For example, $10,000 at 2.80% (Oaken Savings Account, the best ongoing rate we track) earns about $280 in a year. Outside a TFSA, all of it is added to your taxable income.
Put it into practiceTax brackets 2026Do I have to report interest if I did not get a T5 slip?
Yes. Banks may not issue a T5 slip when your total investment income from them is under $50, but the CRA says you must still report the income.
Report interest on line 12100 of your return. If you have accounts at several institutions, add up the interest from each one, including small amounts that came without a slip.
How is GIC interest taxed when it is only paid at maturity?
For most GICs and term deposits, you report the interest earned in each complete investment year, even though you do not receive it until the GIC matures.
A 5-year compound GIC therefore adds taxable interest to your income every year, not all at once in year five. On a 1-year GIC, such as Oaken Financial’s at 3.75%, $10,000 earns $375, all reported for the year it is earned.
Your bank normally issues a T5 slip showing the amount to report for each year.
How much tax will I pay on my interest?
Interest is taxed at your marginal rate: the federal rate for your bracket plus your provincial or territorial rate. The table shows the 2026 federal part on $1,000 of interest.
| 2026 taxable income (federal bracket) | Federal rate | Federal tax on $1,000 of interest |
|---|---|---|
| Top$0 to $58,523 | 14% | $140 |
| $58,523 to $117,045 | 20.5% | $205 |
| $117,045 to $181,440 | 26% | $260 |
| $181,440 to $258,482 | 29% | $290 |
| Over $258,482 | 33% | $330 |
Provincial and territorial tax is added on top, so the combined rate is higher than the federal figure shown. Our 2026 tax brackets guide lists each province’s rates.
How can I avoid paying tax on savings interest?
Hold the savings in a TFSA: interest earned there is never taxed and does not need to be reported. The 2026 TFSA limit is $7,000, and someone who has been eligible since 2009 has $109,000 of total room if they have never contributed.
Many banks offer a TFSA version of their savings account or GICs at the same rate. An RRSP defers the tax instead of removing it, and an FHSA works only if you are saving for a first home.
Keep reading
BankingGIC vs High-Interest Savings Account in Canada: Which Is Better?GIC or high-interest savings account? Today’s best rates (3.75% for a 1-year GIC vs 2.80% in savings), a side-by-side comparison, what the Bank of Canada’s rate increase means, and how a GIC ladder works.
TaxesCanadian Income Tax Brackets 2026The 2026 federal income tax brackets (14% up to $58,523, rising to 33% over $258,482), every province’s rates, the $16,452 basic personal amount, and how much federal tax you pay at common incomes.- BankingBest TFSA Savings Accounts and GIC Rates in CanadaWhere to keep cash in a TFSA: the best savings and GIC rates we track (2.80% savings, 3.75% for a 1-year GIC), how much your TFSA would earn, and what to check before you open one.
- BankingHow Much Interest $10,000 Earns in a Savings Account in CanadaWhat $10,000 earns in one year at 15 Canadian savings accounts, with welcome rates and ongoing rates combined. Best ongoing rate: Oaken Savings Account at 2.80%.
Official sources and further reading
- CRA: interest and other investment income (line 12100) ↗
- CRA: tax rates and income brackets for individuals ↗
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