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CD vs. Treasury Bill Calculator

State and local income tax exempts Treasury interest. In a high-tax state that exemption can beat a bigger headline CD rate.

Tajammal Maqbool
Formula published below · rates as of August 7, 2026 · how we test it
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0 in TX, FL, WA…
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Good to know
Treasury interest escapes state tax — in a state with no income tax that advantage disappears.
T-bills under a year sell at a discount, so the "rate" is the implied yield.
Selling a T-bill early can add to or cut into principal; breaking a CD carries a fixed, known cost.
The Treasury wins by
$37.00
after tax over 1 year on $50,000
CD after tax
$1,540.00
Treasury after tax
$1,577.00
CD before tax
$2,200.00
Treasury before tax
$2,075.00
NEXT STEP · YOUR FIGURES CARRY OVERBreak down the tax on the CD side
On your brackets a Treasury needs just 4.05% to match this 4.40% CD, since the state exemption is worth $132.00 here.
Compare today’s top CD rates →

Putting a number on the state-tax exemption

State and local income tax exempts Treasury interest; CD interest gets no such relief. In Texas or Florida that sentence buys you nothing. In a 9%-bracket state it is worth nine cents out of every interest dollar — enough for a 4.15% T-bill to beat a 4.40% CD for a great many savers. The calculator runs this arithmetic on your actual brackets, which is the only honest way to answer the question.

One useful shortcut: the CD’s after-tax-equivalent Treasury yield is APY × (1 − fed − state) ÷ (1 − fed). Where the T-bill on offer yields more than that, the Treasury wins, headline rates notwithstanding.

Liquidity works differently, not better or worse

Breaking a CD costs a fixed, known number of months of interest. Selling a T-bill early costs whatever the market says on the day — you can finish ahead if rates fell, or behind if they rose. One is an insurance policy with a stated premium; the other is an open position. Match that to your temperament as much as to your math.

Frequently asked

Treasuries carry the full faith and credit of the U.S. government with no dollar cap, while FDIC/NCUA insurance covers $250,000 per depositor per institution. Both count as extremely safe.
Sources & further reading
FDIC — deposit insurance coverage limits: $250,000 per depositor, per insured bank, per ownership category.
NCUA — share insurance for credit union accounts, on the same $250,000 basis.
Regulation DD (Truth in Savings, 12 CFR 1030) — how annual percentage yield must be calculated and disclosed.
IRS Publication 550 — interest income is taxable in the year it is credited, reported on Form 1099-INT.
FDIC National Rates and Rate Caps, July 2026 monthly survey — the national-average CD yields used as benchmarks beside results.
Top-APY figures: institutions' published rate pages and dated August 2026 roundups (Bankrate, CNBC Select, Fortune/Curinos, The College Investor), checked August 7, 2026.

Keep going

COMPARISON
CD vs. Treasury bills →
The state-tax exemption that quietly outperforms a higher headline CD rate.
CALCULATOR
CD Tax →
The federal and state tax owed on your interest.
GUIDE
How CDs are taxed →
Ordinary income, the 1099-INT, and the multi-year trap savers never expect.
The Treasury wins by
$37.00