Here are some options to reduce taxes on your savings interest this year

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Many Americans are earning more on cash after interest rate hikes from the Federal Reserve — and that income can trigger a surprise at tax time. "So many people were shocked by their cash interest earned" and taxes owed, said Boston-based certified financial planner Catherine Valega, founder of Green Bee Advisory. She is also an IRS enrolled agent. Interest from savings accounts or certificates of deposits incurs regular or "ordinary income" taxes, depending on your federal income tax bracket. Some investors also owe state taxes on interest. More from Personal Finance: Biden, Trump face 'massive tax cliff' amid budget deficit, experts say Average credit card balances jump 8.5% year over year — delinquencies rise 529 college savings plans have even more benefits in 2024 Savers are still earning higher yields on cash despite uncertainty from the Federal Reserve on future interest rate cuts this year. The top 1% average rate for savings accounts was hovering around 5% and top-earning 1-year certificates of deposit were paying about 5.5% as of May 16, according to DepositAccounts. Meanwhile, some of the biggest money market funds were paying north of 5% as of that date, according to Crane Data.