Compare cash returns after tax.
MMA after tax
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HYSA after tax
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T-Bill after tax
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Best option
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Your breakdown
Updates live as you type| Product | APY | Tax applied | After tax on $100,000 |
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Three places to park cash, three tax outcomes
A money market account, a high yield savings account, and a Treasury bill all do the same basic job: keep your cash safe and liquid while paying interest. People shop them on the advertised yield alone, but that is the wrong number to compare. What you keep is the yield after federal and state income tax, and the three products are not taxed the same way. This calculator strips out the taxes so you compare apples to apples. A bank MMA and a bank HYSA are both fully taxable at the federal and state level. A Treasury bill, by contrast, is exempt from state and local income tax, which can flip the ranking entirely.
The state-tax break only Treasuries get
Interest from US Treasury securities, including T bills and Treasury money market funds, is taxable by the federal government but exempt from state and local income tax by federal law. You report it on Schedule B and your broker sends it in box 3 of Form 1099-INT, which keeps it separate from bank interest in box 1. For someone in a high tax state, that exemption is real money. A California or New York resident giving up nine or ten cents of every interest dollar to the state keeps all of it on a Treasury. That is why this tool taxes the T bill at the federal rate only, while the MMA and HYSA pay both.
$100,000 in cash, taxed three ways
Suppose you hold $100,000 and you are in the 24 percent federal bracket with a 6 percent state rate. Three products are on the table: an MMA at 4.4 percent, a HYSA at 4.8 percent, and a T bill at 4.6 percent. The HYSA has the highest headline rate. Watch what happens after tax. The MMA and HYSA each lose 30 percent of their interest to combined tax, while the T bill loses only the 24 percent federal share. The T bill wins on take home even though its advertised rate sits below the HYSA.
The chart shows the after tax dollars side by side. The T bill bar is tallest despite its middling APY.
Why the highest APY is not always the winner
The lesson from that example is that the gap between products shrinks or reverses once tax enters. The higher your state rate, the more the Treasury exemption matters. In a state with no income tax, Florida, Texas, Washington, and a handful of others, the state advantage disappears and you should simply chase the best after federal yield, which often means the HYSA. So this is genuinely a state by state decision, and the tool's state rate input is the lever that controls it.
A practical note on Treasury money market funds: many of them hold a mix of Treasuries and repurchase agreements, and only the direct Treasury portion qualifies for the state exemption. Funds publish a year end percentage telling you how much of the dividend is state tax exempt. If you want the full exemption with no ambiguity, buy T bills directly through TreasuryDirect or your broker rather than relying on a fund.
Is a money market account the same as a money market fund?
No, and the difference matters for safety and taxes. A money market account is a bank deposit, FDIC insured up to the limits, and its interest is fully taxable. A money market fund is a mutual fund holding short term debt, not FDIC insured, and its tax treatment depends on what it holds. A government or Treasury money market fund may carry the state tax exemption on the Treasury portion. This tool's MMA input assumes a taxable bank account.
When does a T bill beat a HYSA even at a lower rate?
Whenever the state tax you would owe on the HYSA interest exceeds the rate gap. In the example above, the HYSA paid 0.2 points more, but the 6 percent state tax on its interest more than wiped out that edge. As a quick gut check, if your state rate times the HYSA yield is larger than the difference in yields, the T bill wins after tax. High earners in high tax states almost always come out ahead with Treasuries for their cash.