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Tax on interest income in Canada works like tax on a paycheque: every dollar of interest is added to your other income and taxed at your marginal rate. There’s no special low rate for it. On a $60,000 salary in Ontario, $1,000 of interest costs about $297 in tax.
How much tax will I pay on $1,000 of interest?
What you pay turns on what else you earn, because the interest lands on top of it. We ran $1,000 of extra interest through our income tax engine for a few salaries. Salary is the only other income in each case.
| Salary | Province | Tax on $1,000 interest | Rate on that slice |
|---|---|---|---|
| $30,000 | Ontario | $191 | 19.1% |
| $60,000 | Ontario | $297 | 29.7% |
| $120,000 | Ontario | $434 | 43.4% |
| $60,000 | Quebec | $361 | 36.1% |
The $120,000 row looks high, and it is: federal tax is at 26% there, and Ontario adds a surtax on top of its own rate, which our engine includes. Try your own numbers in the income tax calculator, or check the rate on your next dollar with the marginal tax rate calculator.
Where does interest go on my return?
Line 12100, interest and other investment income. The CRA says to report interest paid or credited to you in the year, and the slip that usually arrives is a T5. If you earned less than $50 you may not get a slip. You still report it.
Here’s the part that trips people up. A missing slip changes nothing. A savings account that paid $23 of interest is taxable even when nothing shows up in your mailbox.
What about GICs that pay at maturity?
If a GIC compounds and pays you years later, you can’t wait until the end. The CRA says you report the interest earned in each complete investment year, even without a slip. A year that runs from 1 July 2024 to 30 June 2025 goes on the 2025 return, and that’s the CRA’s own example.
So a five year compound GIC gives you a small tax bill each year while you see no cash. Plan for it. Put a little aside from other income, or use the tax instalments calculator if your extra income is big enough to trigger payments during the year.
Joint accounts and interest you pay
For a joint account, you generally report your share based on how much you put in. Two people who each contributed half report half each, no matter whose name is first on the T5.
Interest you pay on a loan is a different matter. The CRA treats interest expense on its own line (22100), so it isn’t netted against the interest you earn. Whether a given loan qualifies is a separate question, and not every loan does.
Common mistakes with interest income
Forgetting the small accounts is the usual one, and the duty to report them is yours whether or not a slip ever shows up.
Foreign interest has to be converted to Canadian dollars using the Bank of Canada rate on the day it arose, or another acceptable source. And don’t assume interest is taxed like dividends or capital gains. Dividends have credits, and gains are only partly included (we couldn’t find the 2026 inclusion rate on a CRA page, so we assume the usual 50%). Interest gets none of that. If you’re comparing where to hold savings, the TFSA calculator is the place to see what tax-free growth is worth. We didn’t check the rules for registered accounts against an official page, so read the CRA’s own pages before you rely on them.
Where the numbers come from
The reporting rules are from the CRA’s page on line 12100, updated in January 2026 for the 2025 return. Tax rates and the worked figures come from 2026 federal and provincial data, run through the site’s own calculator. The Quebec row uses Quebec’s brackets and the federal abatement.
Frequently asked questions
Is interest income taxed at a special rate?
No. It's added to your other income and taxed at your marginal rate.
Do I report interest if I get no T5?
Yes. The CRA says you may not get a slip for under $50, but you still report the income.
Which line is interest reported on?
Line 12100, interest and other investment income.
When do I report interest on a multi-year GIC?
Each year, for every complete investment year, even before you're paid.
How do I report a joint account?
Generally your share, based on how much you contributed to the account.
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill
- Ontario income tax and sales tax in 2026
How Ontario income tax works in 2026: the five brackets, the surtax and health premium, the 13% HST, and the calculators that switch to Ontario
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.