The interest received from Tellus is subject to federal and state income tax (where applicable). As per current laws, any earned interest exceeding $10 in a year will be reported to the IRS. At the beginning of the following year, 1099-INT tax form will be made available for customers in the app which you can use to file your taxes for interest earned. Tellus interest is taxed as interest income, not as capital gains. Capital gains tax rates apply only to assets that appreciate in value when sold, like stock shares.