HYSA vs CD vs Treasury Bill Calculator
The advertised rates are not the real comparison - taxes are. Treasury interest skips state income tax entirely, so the winner depends on where you live and your bracket. Enter your numbers and see the after-tax truth for all three.
The state rate defaults to a typical marginal rate near a $100,000 income - edit it to match your bracket.
#1Treasury bill (T-bill 4.1%)
$320 net
$410 earned - $90 tax (federal only - state-exempt) = effective 3.2% APY after tax
#2High-yield savings (HYSA 4.2%)
$289 net
$420 earned - $131 tax (federal + state) = effective 2.89% APY after tax
#3Certificate of deposit (CD 4%)
$275 net
$400 earned - $125 tax (federal + state) = effective 2.75% APY after tax
Break-even: a savings account would need 4.66% APY to match the T-bill after taxes in your state.
CD caveat: withdrawing a CD early typically costs 3-6 months of interest - if you might need the cash, weight the HYSA or a brokerage-held T-bill you can sell.
How to use this calculator
- Enter the cash you want to park and how long you can leave it (3-24 months).
- Fill in the best real rates you can find today: your bank’s HYSA APY, a CD APY for the same term, and the T-bill yield from TreasuryDirect or your brokerage.
- Pick your federal bracket and state - the state rate is editable if you know your exact bracket - and read the ranked after-tax results.
How it works: the math
All three options earn interest the same way; they differ in how that interest is taxed. Savings-account and CD interest is ordinary income to BOTH the IRS and your state. Treasury interest is ordinary income to the IRS but exempt from all state and local income tax. So each option’s after-tax yield is its rate multiplied by (1 − your combined tax rate), where the T-bill’s combined rate skips the state entirely.
A fully worked example with realistic US numbers. A Californian in the 22% federal / 9.3% state brackets parks $10,000 for 12 months. The 4.2% HYSA earns $420, loses $131 to taxes (31.3% combined), and nets $289. The 4.0% CD earns $400, loses $125, and nets $275. The 4.1% T-bill earns $410, loses only $90 (federal 22% - California cannot touch it), and nets $320 - the lowest-looking headline rate wins by $31 over the HYSA. The break-even tells the same story: that saver would need a4.66% APY savings account just to tie the 4.1% T-bill.
Treasury interest is exempt from state and local income taxation perTreasuryDirectand IRSPublication 550. State default rates are estimates near a $100,000 income - verify your bracket with your state’s Department of Revenue. Yields compound annually in this model; actual account compounding may differ slightly.
Frequently asked questions
Are Treasury bills better than a high-yield savings account?
It depends almost entirely on your state income tax. T-bill interest is exempt from state and local tax, so in a high-tax state a 4.1% T-bill can beat a 4.3% HYSA after taxes. In the nine states with no income tax the comparison is just headline yield versus headline yield - and the HYSA usually wins on flexibility.
Is it better to buy a CD or a Treasury bill right now?
At similar yields, the T-bill usually wins for taxable accounts in states with income tax, thanks to the state-tax exemption. CDs win when a bank is running a promotional rate meaningfully above Treasury yields, or when you want simple auto-renewal at your own bank. Compare the after-tax numbers above rather than the advertised rates.
Are T-bill earnings really tax-free in my state?
Interest from U.S. Treasury securities - bills, notes, and bonds - is exempt from all state and local income taxes under federal law, though it is fully taxable at the federal level. Your brokerage or TreasuryDirect reports it on Form 1099-INT, and your state return has a subtraction line for it.
How do I buy Treasury bills - TreasuryDirect or a brokerage?
Both work. TreasuryDirect.gov sells them at auction with no fee but has a dated interface and no secondary market - you hold to maturity. Major brokerages (Fidelity, Schwab, Vanguard) also charge no fee for new-issue Treasuries, let you sell early, and keep everything in one account. Most people find the brokerage route more convenient.
What is a bond-equivalent yield on a T-bill?
T-bills are sold at a discount - you might pay $9,900 today and receive $10,000 at maturity. The bond-equivalent yield converts that discount into an annualized rate you can compare against APYs on savings accounts and CDs. It is the number brokerages display, and the one this calculator expects.
Do I pay state taxes on CD interest?
Yes. CD interest is ordinary income for both federal and state purposes, exactly like savings-account interest. That is why this calculator groups CDs with HYSAs on tax treatment - only the Treasury column gets the state exemption.
What happens if I break a CD before it matures?
Banks typically charge an early-withdrawal penalty of three to six months of interest, which can erase most of a short CD’s advantage. If there is a real chance you will need the money early, weight the HYSA (fully liquid) or a T-bill you can sell on the secondary market through a brokerage.
Is my money safe in a HYSA vs a CD vs a T-bill?
All three sit at the safest end of the spectrum. HYSAs and CDs are FDIC-insured (or NCUA-insured at credit unions) up to $250,000 per depositor per bank. T-bills are direct obligations of the U.S. government. For amounts under the insurance limit, safety should not be the deciding factor - after-tax yield and liquidity should.
Why does my HYSA rate keep changing while a CD rate does not?
HYSA rates float with the federal funds rate and can drop the week after you open the account. A CD or T-bill locks its rate for the full term. If rates are falling, locking wins; if rates are rising, the floating HYSA catches up automatically. That rate-lock difference is worth weighing alongside the tax math.
What is tax-equivalent yield and why does it matter in high-tax states?
Tax-equivalent yield restates a tax-advantaged yield as the taxable yield you would need to match it. The break-even number this calculator shows is exactly that: the HYSA APY that would equal your T-bill after taxes. In California’s 9.3% bracket, a 4.1% T-bill is equivalent to roughly a 4.7% savings rate - a bigger gap than most rate-shopping saves.