Cash after tax
Savings vs CD vs Treasury Bill Calculator
Last updated: October 2026
Quoted rates are before tax, but the three most common places to park cash are not taxed the same way. Interest from a savings account or CD is taxed by the federal government and your state. Interest from a Treasury bill is taxed federally but not by your state. This calculator compares what each one leaves you after tax.
The rates below are examples, not current market rates. Replace them with the rates you are quoted today and your own marginal tax rates.
Inputs
Your amount, your tax rates, the rates you are quoted.
Calculating the default example.
The quoted rate is not what you keep
Every dollar of interest from a bank account loses your federal rate plus your state rate. A Treasury bill loses only the federal rate. So the right question is not which rate is highest, but which rate is highest after the taxes that apply to it.
The third result answers that directly: it is the savings or CD rate you would need to match the Treasury bill after tax in your state. If the bank offers less than that, the Treasury bill keeps more of your interest.
Assumption checks
The comparison assumes each rate holds for the whole period and that interest is taxed at your marginal rates.
What each option leaves you
The tax rate column shows the combined rate that applies to each option. The after-tax yield is the quoted rate multiplied by what tax leaves you, which makes the three options directly comparable.
| Option | Quoted Rate | Tax Rate | Interest | Tax | After Tax | After-Tax Yield |
|---|
How the answer changes by state rate
Same amount, rates and federal bracket, with only the state rate changing. A rate of 0% covers states with no income tax. The point where the winner switches is the state rate at which the Treasury bill exemption starts to outweigh a higher bank rate.
| State Rate | Savings | CD | Treasury Bill | Best |
|---|
Example: $25,000 for 12 months
Take $25,000 held for 12 months by someone in the 22% federal bracket who pays 5% state income tax. The example rates are a savings account at 4.00% APY, a 12-month CD at 4.25% APY, and a Treasury bill at 4.10%.
The savings account earns $1,000.00 and pays 27% tax on it, leaving $730.00. The CD earns $1,062.50 and keeps $775.62. The Treasury bill earns $1,025.00, less than the CD, but pays only the 22% federal tax and keeps $799.50. The lower quoted rate wins by $23.88 because it avoids $51.25 of state tax. To match the Treasury bill after tax, a bank account would need about 4.381% APY.
Now move the same person to a state with no income tax. The CD keeps $828.75 and beats the Treasury bill by $29.25, because the exemption is worth nothing there. With these rates, the winner switches at a state rate of about 2.75%. That is why the same three quotes can point different people to different accounts.
The rules behind the calculation
According to TreasuryDirect, what you earn from Treasury marketable securities is subject to federal tax but exempt from state and local taxes. A Treasury bill is sold below its face value and pays the full face value when it matures; the difference is your interest, and it counts as paid at maturity. Bills mature in a year or less and can be bought directly from TreasuryDirect in $100 increments or through a brokerage account.
Bank interest works differently. Interest from a savings account or CD is taxable income for both your federal and state returns. In exchange, bank deposits are covered by FDIC insurance, which the FDIC states protects $250,000 per depositor, per insured bank, for each ownership category.
When the higher bank rate is still the better choice
After-tax interest is the main number, but it is not the only one. A savings account lets you move money the same day, which matters for an emergency fund. A Treasury bill pays out at maturity, and selling one early through a brokerage means accepting the market price that day. A CD usually charges an early withdrawal penalty if you break it before the term ends.
A practical approach is to keep the money you may need this month in savings, and compare CDs and Treasury bills for money with a known date, such as a tax bill, tuition payment, or down payment. For that dated money, the after-tax comparison above is the deciding number.
Errors that flip the answer
- Using an average tax rate instead of a marginal rate, which understates the tax on interest.
- Comparing a CD’s APY with a Treasury bill’s discount rate. Use the investment rate or yield, not the discount rate shown at auction.
- Forgetting that a high savings rate can be lowered at any time, while a CD and a Treasury bill lock their rate until maturity.
- Assuming a Treasury money market fund is fully state tax-exempt. A fund’s year-end tax statement lists the share that came from U.S. government interest, and state rules for funds vary.
- Breaking a CD early and ignoring the penalty when comparing it with a bill.
- Holding more than the FDIC limit at one bank without checking ownership categories.
How the comparison is calculated
For each option, interest is the amount times the yield compounded once a year over the holding period. Bank interest is taxed at your federal plus state marginal rate. Treasury bill interest is taxed at the federal rate only. After-tax yield is the quoted rate multiplied by one minus the rate that applies. The bank rate needed to match the bill is the bill yield times one minus the federal rate, divided by one minus the combined rate.
The calculator ignores itemized deductions, local income taxes, the alternative minimum tax, and the timing of tax payments. Periods longer than a year assume each bill is reinvested at the same yield. Review the methodology limitations before relying on small differences.
Good fits
- Choosing where to hold cash for a known date.
- Checking whether a CD promotion beats a Treasury bill in your state.
- Finding the bank rate that matches a Treasury bill after tax.
- Comparing options after a move to a different state.
Limits
- Retirement accounts, where interest is not taxed each year.
- Municipal bonds or bond funds.
- Money market funds without their tax breakdown.
- Tax filing or tax advice.
Savings, CD, and Treasury bill questions
These answers cover how each option is taxed and what the calculator assumes.
Are Treasury bills taxed by my state?
No. Interest on Treasury bills is subject to federal income tax but exempt from state and local income tax. Interest from a bank savings account or CD is taxed by both.
What counts as interest on a Treasury bill?
You buy a bill below its face value and receive the full face value at maturity. The difference is the interest, and it is treated as paid when the bill matures.
What tax rates should I enter?
Enter your marginal rates: the federal and state rates that apply to your next dollar of income. Your average tax rate understates the tax on extra interest.
Why can a lower T-bill yield win?
Because the bank account loses part of its interest to state tax and the Treasury bill does not. When the state rate is high enough, a lower T-bill yield leaves more after tax.
When does the bank account win?
When you live in a state with no income tax, when the bank rate is well above the T-bill yield, or when you need same-day access to the money without selling anything.
Is a Treasury bill as safe as an insured bank account?
Treasury bills are backed by the U.S. government. Bank deposits are insured by the FDIC up to $250,000 per depositor, per insured bank, for each ownership category. Both are considered low-risk for cash.
Does this include the state tax deduction on my federal return?
No. The calculator ignores itemized deductions such as state and local taxes, so it can slightly overstate the bank account’s tax cost for people who itemize.
Is this tax advice?
No. It is an educational estimate, not tax, legal, or investment advice. Confirm your rates and situation with a tax professional.
Plan where your cash goes
Emergency Fund CalculatorHow much cash to keep accessibleSavings Goal CalculatorMonthly savings for a dated targetCompound Interest CalculatorGrowth with tax and inflationAPR to APY CalculatorConvert a quoted rate to its yieldCD Early Withdrawal CalculatorBreak a CD or keep itCalculator MethodologyFormulas and limitationsDisclaimerEducational scope and limits
Educational estimate only. This calculator does not provide tax, legal, investment, or financial advice. Use it to compare after-tax interest, then confirm current rates and your tax situation before moving money.