Do you pay taxes on the interest earned on a 12-month CD, that spans two years, i.e., purchased in March 2023 and matures in March 2024?

Yes, the interest on a CD is taxable, but when you report it depends on whether it is a short-term CD, or a long-term CD.

For CD terms of one year or less, you will have to pay taxes on interest when it's received. That means if you start your 12 month CD in 2023, the interest is reported when it matures in 2024. 

For CD terms longer than one year, you will have to pay taxes on interest earned each tax year during the CD term. 

In either case, your bank, or broker will let you know how much to report by issuing a 1099-INT for the CD interest. 

You’ve already gotten solid answers, but here’s anotherr way to think about it.

For most individual taxpayers (who use the cash method), interest is generally taxable when it is:

• Actually received, or
• Credited to your account and available without substantial penalty

For CDs that mature in one year or less and pay interest at maturity, you typically report it in the year it’s paid (which matches what Julie explained).

Where it gets confusing is CDs longer than one year. Under IRS Pub 550, a CD with a term longer than one year can fall under Original Issue Discount (OID) rules. That means you may have to include a portion of the interest in income each year as it accrues, even if you don’t receive the cash yet.

However, in practice:

• A lot of U.S. banks structure CDs so they either issue a 1099-INT for what must be reported, or
• They issue a 1099-OID if annual accrual reporting is required

If you receive neither until maturity, that’s usually a signal that reporting is expected at maturity (though as Robert noted, you can elect to accrue annually if you want consistency).

For foreign CDs, the same U.S. tax principles apply, even if the foreign bank doesn’t issue a 1099. The U.S. taxes worldwide income. The most important question is whether the interest is considered constructively received or subject to OID accrual under U.S. rules, not how the foreign jurisdiction treats it.

One practical tip: the structure of the CD matters (term length, compounding frequency, whether interest is credited annually, etc.). Before opening multi-year CDs, it’s worth understanding how interest will be reported for tax purposes. Always make sure to compare CD rates first. I find CD Valet to be really useful, it's a neutral CD marketplace that lists over 40,000 CDs from federally-insured banks and credit unions across the US. That can help you review term structures and disclosures across institutions before committing, which can avoid surprises at tax time.

Hope that helps clarify the OID vs maturity distinction a bit.

(BTW ITT keeps removing bits of my comment saying its HTML. Not sure what that's about but hope my comment still makes sense!)