
How Taxes Work with TrustPledge
One of the most common questions we receive is:
“Do I have to pay taxes on the money I earn with TrustPledge?”
The short answer is yes — but here’s the good news:
You’re only taxed on what you earn, not what you deposit.
Let’s break it down.
You’re Taxed on the Rewards, Not Your Deposit
When you join a plan with TrustPledge, your original deposit (sometimes called your principal) is never taxed. The only amount you may owe taxes on is the reward payout — the amount your plan earns over its term.
Example:
- You start a $5,000 plan with TrustPledge
- After 12 months, your plan earns $960 in rewards
- Only the $960 is considered taxable income
Your full $5,000 remains untouched.
How You’ll Report It
At year-end, you’ll receive a 1099-INT (or similar statement), showing how much you earned. It’s just like receiving interest from a savings account or CD.
The difference? This time you’re actually earning something worth reporting.
What About Tax Rates?
Reward earnings with TrustPledge are usually taxed as ordinary income. Your rate depends on your income and filing status. But even after taxes, your net earnings can far exceed what a bank pays.
Example for someone in the 22% tax bracket:
- You earn $960 in rewards
- You owe roughly $211 in taxes
- You still take home $749 — way ahead of a bank’s return
Want to Reduce Taxes? Try These Tips:
1. Use a Tax-Advantaged Account (like an IRA):
If available, contributing through an IRA may delay or reduce taxes on your earnings. Ask your tax advisor if this fits your strategy.
2. Reinvest Your Rewards:
Rolling your earnings into a new plan won’t remove the tax obligation, but it helps compound growth — and build wealth faster.
3. Track Possible Deductions:
Depending on your income and filing status, you may qualify for deductions that offset your taxable income. A tax pro can help you identify them.
More Growth, Less Worry
Yes, you’ll owe taxes on your earnings — but with TrustPledge’s reward-focused structure, many members find that the gains far outweigh the tax impact.
Keep your deposit. Grow your balance. Only pay on what you earn.
That’s how smart financial growth should work.