T-Bill vs CD Comparison Calculator
Compare a Treasury bill's after-tax yield against a CD's after-tax APY. T-bill interest is exempt from state and local income tax — this calculator accounts for that.
Inputs
| T-Bill | CD |
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How the Comparison Works
The key advantage of T-bills in high-tax states is that their interest is exempt from state and local income tax. This calculator applies:
- T-bill after-tax yield = BEY × (1 − federal tax rate)
- CD after-tax APY = APY × (1 − federal tax rate − state tax rate)
This is a simplified model. Your actual after-tax return depends on your filing status, deductions, and state-specific rules. Use this for a rough comparison, then consult a tax professional for decisions.
CD rate calculator coming soon: Once cdratecalc.com is live, you can pull CD rates directly from there for comparison.
Frequently Asked Questions
It depends on your tax situation and needs. T-bill interest is exempt from state and local income tax, which can make them more attractive than CDs in high-tax states. CDs often allow more flexibility in choosing a term and may have FDIC deposit insurance. For federal tax purposes the returns are treated similarly. Always compare after-tax, after-fee returns for your specific situation.
Use the T-bill's investment yield (BEY), not the discount yield. BEY uses a 365-day year and the price paid as the denominator, which puts it on the same basis as CD APY. The discount yield quoted at auctions will always be lower than the BEY for the same T-bill.
No. T-bills are backed by the full faith and credit of the U.S. government, which is considered extremely safe, but they are not FDIC insured. CDs held at FDIC-member banks are insured up to $250,000 per depositor.
Yes. T-bills can be sold in the secondary market before maturity through most brokerage accounts, though the price you receive will depend on market conditions. CDs typically have early-withdrawal penalties.