Foreign Savings & U.S. Taxes
Interest rates, tax treaties (DTAA), and IRS reporting rules (FBAR/FATCA) for foreign bank accounts held by U.S. residents.
Select Your Home Country
The tax treatment of foreign savings accounts by the U.S. IRS depends on bilateral tax treaties and specific asset structures. Choose below to load the appropriate guide:
NRE vs. NRO Fixed Deposit (FD) Rates (2026)
Indian banks offer attractive interest rates on Non-Resident External (NRE) and Non-Resident Ordinary (NRO) fixed deposits. Here is an average rate comparison for major retail banks:
| Bank Name | NRE FD Rate (1-3 Years) | NRO FD Rate (1-3 Years) | Indian Tax Status |
|---|---|---|---|
| State Bank of India (SBI) | 6.75% – 7.10% | 6.75% – 7.10% | * **NRE:** 100% Tax-Free in India. * **NRO:** Subject to 30.9% TDS (reducible to 15% under DTAA). |
| HDFC Bank | 7.00% – 7.25% | 7.00% – 7.25% | |
| ICICI Bank | 7.00% – 7.25% | 7.00% – 7.25% | |
| Axis Bank | 7.10% – 7.30% | 7.10% – 7.30% |
Indian banks automatically deduct a flat 30.9% tax on all NRO account interest. Under the US-India Double Taxation Avoidance Agreement (DTAA), you can reduce this rate to **15%** by submitting **Form 10F** on the Indian Income Tax e-filing portal, along with a **Tax Residency Certificate (Form 6166)** obtained from the U.S. IRS.
U.S. IRS Taxation of NRE/NRO Interest
Many Indian expats incorrectly assume that since NRE interest is tax-free in India, it is also tax-free in the U.S. **This is a dangerous mistake.** The U.S. IRS taxes its residents on their **worldwide income**, and does not recognize the Indian tax-free status of NRE accounts.
- Schedule B (Form 1040): You must declare all accrued interest from both NRE and NRO accounts as taxable interest income.
- FBAR (FinCEN Form 114): If the aggregate balance of all your foreign bank accounts (NRE, NRO, PPF, mutual funds) exceeds **$10,000** at any point in the year, you must report them.
- Foreign Tax Credit (Form 1116): You can claim a credit in the U.S. for the 15% TDS paid to the Indian government on your NRO interest, avoiding double taxation.
Tax Compliance Tools
FBAR exchange rate tip
When filing your FBAR, do not use random currency conversion websites. You are legally required to use the official **Bureau of the Fiscal Service** Treasury Reporting Rates of Exchange for December 31 of the tax year. Using the wrong conversion rate can lead to audits or discrepancies.