SBI Savings Account Interest Rate For September 2026: Know How Much You Can Earn?

If you hold a State Bank of India (SBI) savings account, you’re likely wondering how much your money will earn in September 2026. Despite recent changes to fixed deposit rates and some withdrawal charges, SBI has kept its savings account interest rate unchanged at 2.50% per annum. 

In this article, we break down the current SBI savings account interest rate, show you exactly how your interest is calculated, and estimate how much you can earn on different balance levels. We’ll also touch on the tax treatment of savings account interest so you can plan your returns more effectively. 

• Current Rate (Aug 2026): 2.50% p.a. 
• Calculation Method: Simple interest on daily balances, based on actual days/360. 
• Credit Frequency: Quarterly. 
• Source: SBI official interest rates page, updated as of August 20, 2026. 

Interest Earnings Breakdown 

Interest is accrued daily based on the outstanding balance in your account and is paid out on a quarterly credit cycle.

Key Details & Rules

Calculation Formula:

Daily Interest = Daily Closing Balance × Interest Rate / 365×100

Minimum Balance Requirement: SBI does not mandate an Average Monthly Balance (AMB) for its regular savings accounts. 

Important Distinction: Special Account Types 

While the standard rate is 2.50%, certain specialized SBI savings accounts may offer a higher interest rate, and it's crucial not to confuse them. 

• Regular Savings Account: Offers 2.50% p.a. on all balances. 
• Small Savings Account: A basic account with limited services, offering a higher 4.00% p.a. 
• Savings Plus Account: This account is linked to a Multi Option Deposit Scheme (MOD). While the savings portion may earn a different rate, the deposits transferred to a term deposit (MOD) can potentially earn a higher interest rate of up to 4.00% p.a. or more, as per fixed deposit rates. 
• Basic Savings Bank Deposit Account: This is a zero-balance account with no minimum balance requirement, but its interest rate may differ from the standard savings account. 

Key tax rules to cover with the SBI savings interest rate, applicable for AY 2026-27 (FY 2025-26), are outlined below: 

1. Head of Income 

• Interest earned on a savings bank account is taxable under “Income from Other Sources” in the income tax return. 
• This applies whether the interest is from:

1. A bank savings account 
2. A co-operative bank savings account 
3. A post office savings account 

• The entire interest amount must be disclosed in the ITR, even if no TDS is deducted. 

2. Deduction under Section 80TTA / 80TTB 

Section 80TTA – For individuals below 60 years & HUFs 

• Deduction of up to ₹10,000 per financial year is available on aggregate interest earned from: 

1. Savings accounts with banks 
2. Savings accounts with co-operative societies engaged in banking 
3. Post office savings accounts 

Taxability

• If total savings interest is ≤ ₹10,000: fully deductible, effectively tax-free (under the old tax regime). 
• If total savings interest is > ₹10,000: only ₹10,000 is deductible; the excess is taxable at the applicable slab rate.

Section 80TTB – For Senior Citizens (60 years and above) 

Senior citizens are not eligible for deduction under Section 80TTA. Instead, they can claim a separate deduction of up to ₹50,000 per financial year under Section 80TTB on interest income from: 

• Savings accounts 
• Fixed deposits (FDs) 
• Recurring deposits (RDs) 
• Other interest-bearing deposits 

This is a higher, exclusive limit designed specifically for senior citizens. 

Regime Note

Deductions under Sections 80TTA and 80TTB are available only under the old tax regime. 

Under the new tax regime, these Chapter VI-A deductions are generally not allowed, and the entire interest income becomes taxable at the applicable slab rates. 

3. TDS on Savings Interest 

• No TDS deduction by banks on savings account interest (Section 194A exclusion, applicable for FY 2026-27). 
• TDS rules apply mainly to FDs, RDs, and other term deposits - not to regular savings accounts. 
• Important: Even without TDS, the interest is fully taxable and must be reported in your ITR.

4. ITR Reporting 

Savings account interest must be: 

• Disclosed under the head "Income from Other Sources" in the applicable schedule of the ITR form. 
• Reported as the gross interest amount before claiming any deduction under Section 80TTA or 80TTB. 

It is essential to ensure that the reported figure matches the data reflected in AIS/TIS (as furnished by banks to the Income Tax Department) to avoid discrepancies or tax notices. 

5. Practical Example 

Consider a non-senior taxpayer opting for the old tax regime with total savings account 
interest (across all banks) of ₹14,000 for FY 2025-26. 

Tax Treatment

• Gross interest to be reported under "Income from Other Sources": ₹14,000 
• Deduction under Section 80TTA: ₹10,000 
• Taxable portion: ₹4,000, added to total income and taxed at the applicable slab rate. 

Under the New Regime: The entire ₹14,000 becomes taxable, as no 80TTA deduction is available.