Tax-exempt cash deposits detailed
In Russia, a significant change has been introduced regarding the taxation of interest income from bank deposits. Starting from 2024, this income is subject to personal income tax (PIT) at a progressive scale, but a tax-free allowance also applies.
The tax-free amount on interest income from bank deposits is set at up to 1 million rubles per year. Any interest income exceeding this threshold is taxed according to the progressive PIT scale applicable to the individual taxpayer. The progressive tax rates for personal income in Russia are 13% for most income up to 5 million rubles and 15% for income above 5 million rubles per year.
It's important to note that the Russian Central Bank's key rate, which was maintained at 16% in 2024, primarily influences the safe harbor rates used for tax-related calculations of interest income and deductions but does not directly determine the PIT rate on individual interest income.
For individuals, interest on bank deposits up to 1 million rubles per year remains tax-free, and any amount above this threshold is taxed progressively at the regular personal income tax rates (13% or 15%) depending on total income levels.
As of now, there are no indications of a flat withholding tax rate specifically on bank interest for individuals beyond this progressive taxation and tax-free threshold starting 2024.
The tax authority will be responsible for calculating the tax on interest from bank deposits, and it must be paid by December 1, 2025. Financial organizations have already sent information about all paid interest to the tax authority.
For those whose total income for the year exceeds 5 million rubles, the tax rate for income from bank deposits increases to 15%. It's also worth noting that taxes on income from bank deposits above 210,000 rubles must be paid this fall.
In summary:
- The tax-free threshold on interest from bank deposits is up to 1 million rubles per year.
- The progressive tax rates for personal income are 13% up to 5 million rubles and 15% for income above 5 million rubles per year.
- The Russian Central Bank's key rate, currently at 16%, influences the safe harbor rates but does not determine the PIT rate on individual interest income.
- The tax applies to individuals and their interest income from bank deposits.
- The tax on interest from bank deposits must be paid by December 1, 2025.
- No changes to this tax treatment have been reported post-2024.
- The tax authority will calculate the total interest income and the tax due for bank deposits.
- Financial organizations have already sent information about all paid interest to the tax authority.
- Citizens paid this tax for the first time in 2024, for the preceding period.
- The tax on interest from bank deposits became law in 2021.
- No information is available about the tax-free amounts for income from sources other than bank deposits or any changes to the tax-free amounts or progressive tax scale for bank deposits in 2025.
Personal-finance matters in Russia now include the taxation of interest income from bank deposits. The tax-free amount on these deposits is set at up to 1 million rubles per year, while any excess is taxed progressively at 13% for most income up to 5 million rubles, and 15% for income above 5 million rubles.
