Cash Yield Showdown: Where Your Cash Earns the Most After Tax and Inflation
Savings accounts, CDs, Treasury bills, money market funds, brokerage sweeps and I bonds are taxed differently, and your state decides which one wins. Enter the yields you’re actually seeing; the calculator ranks them after federal and state tax and after inflation.
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Your cash and your taxes
The yields you’re seeing
| Option | Yield | Tax rate | After tax | After inflation | Earned after tax |
|---|
Yields are the ones you enter; the defaults are illustrative, not quotes. Nothing you type leaves your browser. Education, not tax advice.
How the Showdown Works
Every option’s yield is cut by the taxes that apply to it, then compared on what you keep. The rules the calculator uses:
- Savings accounts, CDs and bank sweeps are taxed by the IRS and your state.
- Treasury bills are taxed by the IRS only; states and cities can’t tax them.
- Money market funds pay dividends taxed by the IRS; the share that came from U.S. government obligations is state-exempt in most states, all of it for a Treasury-only fund. In California, Connecticut and New York, nothing is exempt unless the fund met a 50% test at every quarter-end.
- I bonds are taxed by the IRS only. They can’t be cashed in the first year, and before five years the last three months of interest are forfeited.
- Your federal rate is the bracket your taxable income falls in, from the IRS’s 2026 tables; the 3.8% net investment income tax is added if you tick it.
After-tax yield = yield × (1 − federal rate − state rate on that option). After-inflation yield = after-tax yield − the latest 12-month CPI change, the same convention as our real interest rates guide. Dollars earned compound at the after-tax yield over your holding period. The break-even is the savings APY that keeps as much as the bill: bill yield × (1 − federal) ÷ (1 − federal − state).
Why Your State Changes the Winner
A Treasury bill’s edge is the state tax it skips, so the same yields rank differently by state. With the default yields and a 3.90% bill: a single filer in California at 24% federal and 9.3% state needs 4.44% from a savings account to match it; a Texas couple, with no state income tax, needs only 3.90%; a New York couple at 32% plus the 3.8% net investment income tax and a 6.85% state rate needs 4.37%. Try the three examples above.
Money market funds sit in between, and in California, Connecticut and New York the 50% test decides whether any of the dividend escapes state tax. Uninvested brokerage cash is often swept into a bank program paying far less; see brokerage cash sweeps for how to check yours. For the full comparison with a worked example, read T-Bills vs Savings vs CDs vs Money Market Funds, and for buying bills, how to build a T-bill ladder.
What the Calculator Leaves Out
- The state tax deduction. If you itemize, state tax you pay on interest is deductible federally (within the SALT cap), which trims the bill’s edge slightly.
- Rates that change. A savings APY can move any day, a CD is assumed to renew at the same rate, and the I bond rate resets every six months (the November 1 reset).
- Quoting conventions. Bills are often quoted on a discount basis, which understates the yield; enter the investment rate from the auction results.
- Bank fine print. Promotional rates, balance caps and direct-deposit requirements. Check the benchmarks on our rates guide before you move money.
- Everything personal. The alternative minimum tax, state rules for your specific fund, and when you actually pay the tax.
For every state at once, the Real Yield Map ranks all 50 states and DC by how much more a Treasury bill keeps than a savings account paying the same rate, at three incomes, after tax and inflation.
Frequently Asked Questions
Sources: IRS Rev. Proc. 2025-32 (2026 brackets) · IRS: Net investment income tax · BLS CPI release · TreasuryDirect: Treasury bills · TreasuryDirect: I bond rates · SEC Investor.gov: money market funds. Checked Sep 28, 2026.