We're nearing the end of the regular tax season. With the tax deadline on April 15, you might have already filed your return. If you haven't yet, here are some of the best tax software programs to expedite the process.
While tax refunds are slightly higher this year, not everyone will qualify. If you usually owe taxes, there's a workaround you can do to earmark money now, so it won't be as much of a bummer when you file next year.
Here's how a one-year CD can help.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Save for future tax debt with a one-year CD
A one-year certificate of deposit allows you to set aside funds now, so when you file next year, you'll have cash on hand to pay your tax debt. They're easy to set up and offer an effortless way to gain a return, which is less money you'll have to pay out-of-pocket.
Now is an excellent time to lock in a CD rate. While the Federal Reserve hasn't lowered rates so far this year, some traders bet the Fed will cut rates four times this year to bail out the economy based on fears that President Donald Trump's tariffs will result in a recession.
If this happens, saving rates, including CDs, will likely dip. Locking them in now ensures you earn a healthy rate of return, regardless of what the Fed decides.
Using this tool from Bankrate can help you find a good fit:
Best one-year CD to pay tax debt
Along with the Bankrate tool, we chose a one-year CD that can help you maximize savings while earning a healthy rate of return:
Account | APY | Min Deposit |
|---|---|---|
4.40% | $1,000 |
Bask Bank's one-year CD allows you to earn one of the highest rates available for one-year CDs. With a $1,000 minimum deposit, it's a low balance requirement for many tax filers who owe.
Considerations when using a CD
A CD works best when you have enough cash on hand to devote a portion to a savings vehicle and forget about it.
Banks and credit unions will allow you to break open a CD if a financial emergency arises, but will charge you to end the CD before its maturity date. The fee can offset any interest earned.
If you're concerned about having access to your cash, but want to try a CD, a no-penalty CD is a wise alternative. You can earn a high rate of return and have access to your cash in the future, should you need it.
Another thing to keep in mind is once you open a CD, you won't be able to add more money to it. If you plan to save money now for future tax debts with regular deposits throughout the year until filing in 2026, a money market account or a high-yield savings account is a smarter alternative.
The bottom line
If you owe taxes annually, set aside money now so you're ready to go this time next year. A one-year CD is a perfect savings vehicle for this approach: You'll earn a rate outpacing inflation, and your money will be available when you file next year.
Our top choice for a one-year CD earns you a healthy rate of return, which means a little less money from your pocket when you pay. Keep in mind that CDs are inflexible savings vehicles and work best when you can park the money and forget it.
Related content
-
A Comfortable Retirement is About More Than MoneyWhen it comes to a happy retirement, money can’t buy these things.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It HelpsSaving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
Noctourism: The New Travel Trend For Your Next Trip"Noctourism" is a new trend of building travel and vacations around events and plans that take place at night. Take a look at some inspiring noctourism ideas.
-
Eight Tricks to Shop for Glasses if You're Over 50Shopping for glasses often gets trickier — and more expensive — as you age. If you've over 50, take these steps when you set out to buy a new pair.
-
My First $1 Million: Electric Utility Executive, 56, South CarolinaEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
How to Turn Amazon Prime Day Into a Travel WindfallDuring Amazon's Prime Big Deal Days sale, skip the fluff — here’s how to extract real travel value via gear, services and strategic credit cards.
-
Need a Reason to Retire Early? Consider These Eye-Opening StatsThe majority of people retire early, leaving the workforce before reaching their Full Retirement Age (FRA). Maybe you should, too.
-
Seven Things You Should Do Before 2026 Because of One Big Beautiful Bill ChangesThe new law ushers in significant changes for most taxpayers. Make these moves now to take advantage of them.
