CD Calculator
Interest, Tax, Penalty and APY
Work out what a certificate of deposit will earn by maturity, the tax on the interest, your return after inflation, and what breaking it early would cost.
Read the full answer — method, rates and figures
Quick answer: A CD earns its APY each year, so $10,000 in a 1-year CD at 4.50% APY is worth $10,450.00 at maturity ($450.00 of interest), and in a 2-year CD at the same APY $10,920.25. The interest is taxed as ordinary income each year it accrues, even if you leave it in the CD.
Breaking a CD early costs a penalty set by the bank, often several months of interest, which can cut into your deposit if you withdraw soon after opening. Deposits are FDIC-insured up to $250,000 per depositor, per bank, per ownership category.
With US inflation at 3.4% over the 12 months to August 2026, a CD's real return is its after-tax yield minus that.
How much will $10,000 earn in a CD?
At 4.50% APY, $450.00 in 1 year ($10,450.00 at maturity) and $920.25 over 2 years, before tax. Interest is taxed as ordinary income each year it accrues.
Value at maturity
$10,450.00
Interest earned
$450.00
Interest after tax
$351.00
Real return a year
0.11%
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Value at maturity
$10,450.00
Interest earned
$450.00
Interest after tax
$351.00
Real return a year
0.11%
How it adds up
- • $10,000 × (1 + 4.50%)^1 = $10,450.00 after 1 year.
- • 4.50% APY is a 4.402% rate (APR) compounded daily.
- • Federal tax on the interest: $99.00, leaving $351.00: an after-tax yield of 3.51% a year.
- • After 3.4% inflation (12 months to August 2026), that is a real return of 0.11% a year.
What if you break it early?
After 6 months you would have earned $222.52; a 3-month penalty is about $110.24, so you would get back $10,112.28.
Estimate: penalty as months of simple interest at the stated rate. Your bank's agreement sets the actual method.
$10,000 at 4.50% APY, by term
| Term | At maturity | Interest |
|---|---|---|
| 6 months | $10,222.52 | $222.52 |
| 1 year | $10,450.00 | $450.00 |
| 18 months | $10,682.54 | $682.54 |
| 2 years | $10,920.25 | $920.25 |
| 3 years | $11,411.66 | $1,411.66 |
| 5 years | $12,461.82 | $2,461.82 |
Same APY for every term, for comparison; real CD rates differ by term.
APR to APY converter
Daily: 4.498% APY · Monthly: 4.490% APY · Quarterly: 4.473% APY · Annually: 4.400% APY
And back: 4.50% APY = 4.402% daily · 4.410% monthly · 4.426% quarterly · 4.500% annually.
Is your cash keeping up with prices? Check any amount with the inflation calculator, or size your safety net with the emergency fund calculator.
Comparing CDs with investing? Try the compound interest calculator or the dividend calculator.
Last reviewed 13 October 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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Get Richify — 7-day free trialHow it works
A certificate of deposit pays a fixed rate for a fixed term. Banks quote the annual percentage yield (APY), which already includes compounding, so your balance after t years is the deposit × (1 + APY)t. The compounding frequency matters only for converting between APY and the nominal rate (APR). If you withdraw before maturity, the bank charges the penalty in your account agreement; this calculator estimates it as that many months of simple interest on the deposit, the most common form.
In a taxable account, each year's interest is taxed as ordinary income with the 2026 federal brackets and standard deduction, plus the 3.8% Net Investment Income Tax where it applies; state tax is not included. The real return subtracts inflation, using the latest 12-month change in the BLS Consumer Price Index (3.4% to August 2026). Rates are ones you enter: this page does not track bank offers.
Sources: Regulation DD (Truth in Savings), APY definition; FDIC deposit insurance; IRS Rev. Proc. 2025-32 (2026 brackets); BLS CPI-U.
How to use this calculator
- Enter your deposit and the CD's APY (the rate the bank quotes).
- Pick the term, and the compounding frequency if you want to see the equivalent interest rate (APR).
- Choose a taxable account or an IRA CD; for taxable, add your filing status and other income.
- Read the value at maturity, the interest after tax and your real return after inflation.
- To see what breaking the CD early costs, enter the bank's penalty in months and when you would withdraw.
❓ Frequently Asked Questions
How much will $10,000 earn in a CD?
At 4.50% APY: $450.00 in 1 year and $920.25 over 2 years, before tax. Because the APY already includes compounding, the value after t years is the deposit × (1 + APY)^t.
Enter your own rate and term in the calculator.
Is CD interest taxable?
Yes. It is taxed as ordinary income, at your federal bracket rate plus the 3.8% Net Investment Income Tax if your income is high enough, and usually state income tax too.
For a CD longer than a year, you owe tax on the interest each year it accrues, even though you do not get it until maturity; the bank reports it on Form 1099-INT. A CD inside an IRA is taxed only when you withdraw from the IRA.
What is the penalty for cashing a CD early?
It is set in the account agreement, typically a number of months of interest (for example 3 months on short terms and 6 to 12 months on longer ones). If you withdraw before you have earned that much interest, the penalty comes out of your deposit: $10,000 at 4.50% APY broken after 1 month with a 6-month penalty returns about $9,816.26.
Enter your bank's penalty in the calculator.
What is the difference between APY and APR on a CD?
APR (the interest rate) is the rate before compounding; APY is what you actually earn in a year once compounding is included. Banks must quote the APY under the Truth in Savings Act, so compare CDs by APY.
The more often interest compounds, the higher the APY for the same rate; the converter on this page shows both.
Are CDs FDIC insured?
Yes, CDs at FDIC-insured banks are covered up to $250,000 per depositor, per bank, for each account ownership category (credit union share certificates have the same limit through the NCUA). Above that, split deposits across banks or ownership categories.
CD or Treasury bills?
Both are low-risk. Treasury bill interest is exempt from state and local income tax, which can make a slightly lower Treasury yield worth more after tax if you live in a high-tax state; CD interest is fully taxable by states.
CDs lock in a rate for the whole term, while bills are usually a year or less, so you reinvest at whatever rates are then.
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Further Reading
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