COMPARISON · MONEY · CASH YIELDS
The top 1-year CD pays 4.75% APY and the 52-week T-bill pays 4.616% — so the CD looks like the winner. On $10,000 in the 22% federal bracket in a 5% state, the CD earns $475, pays tax twice, and keeps $346.75. The T-bill earns $461.60, pays federal tax only, and keeps $360.05. T-bills win by $13.30. But in a no-tax state the verdict flips — type your own rates below.
Enter the T-bill rate, the CD APY, your amount, and your tax brackets. The calculator taxes T-bill interest at your federal rate only (exempt from state and local tax under 31 U.S.C. §3124), taxes CD interest at federal plus state, and names the winner with the exact dollar and percentage-point gap.
Rate, then tax, then access. The headline rate is not what you keep: CD interest is taxed at federal plus state; T-bill interest is taxed at federal only — the state-tax exemption (31 U.S.C. §3124) is worth roughly the state bracket times the T-bill’s interest. At the defaults, a 4.75% CD against a 4.616% T-bill on $10,000 in the 22% bracket with 5% state tax keeps $346.75 vs $360.05 — T-bills win by $13.30 (0.133 pp). Set the state rate to 0 (a no-tax state) and the CD wins by $10.45. Enter the two rates you can actually get; the state field decides the duel.
Setup: $10,000, a 4.616% T-bill (52-week bill, Sep 29, 2026 auction investment rate), a 4.75% APY CD (top nationally-available 1-year CD, Bankrate Oct 11, 2026), a 22% federal bracket, and a 5% state bracket.
Line 1 — the gross. T-bill: $10,000 × 4.616% = $461.60. CD: $10,000 × 4.75% = $475.00 (APY already includes compounding, so no exponent here). The CD earns $13.40 more before tax — that is the whole temptation.
Line 2 — the tax. T-bill interest skips state tax: $461.60 × (1 − 0.22) = $360.05 kept (a 3.600% effective yield). The CD pays both: $475 × (1 − 0.22 − 0.05) = $475 × 0.73 = $346.75 kept (a 3.468% effective yield). The state tax on the CD is $23.75; the T-bill’s state exemption is worth exactly that.
Line 3 — the verdict. $360.05 − $346.75 = $13.30 a year on $10,000; 3.600% − 3.468% = 0.133 percentage points — T-bills win. The CD’s 0.134-point rate lead cannot survive the state tax.
Branch — no-tax state (state 0%, everything else at default): the CD pays federal only: $475 × 0.78 = $370.50, against the same $360.05 T-bill: CDs win by $10.45 (0.105 pp). Without state tax the CD’s rate lead flows straight through — the flip is real. Florida, Texas, Washington, Nevada, Wyoming, South Dakota, Alaska savers — the CD is your answer.
Branch — high bracket (32% federal + 9.3% state, e.g. California): the T-bill keeps $461.60 × 0.68 = $313.89; the CD keeps $475 × (1 − 0.32 − 0.093) = $475 × 0.587 = $278.83: T-bills win by $35.06 (0.351 pp). A higher state bracket only widens the T-bill’s edge — the exemption is worth more the higher your taxes are.
Branch — the error case: set federal + state to 100% or more (e.g. 95% + 10%) and the calculator refuses — combined marginal rates under 100% only, please. Real top combined rates land near 50%.
Alternate terms — 6 months (26-week bill 4.314% vs 6-month CD 4.40%): the same one-year math on shorter paper. T-bill: $10,000 × 4.314% = $431.40 × 0.78 = $336.49 after tax. CD: $10,000 × 4.40% = $440 × 0.73 = $321.20 after tax. T-bills win by $15.29 (0.153 pp) — the state-tax mechanism is identical at every term.
| Output | Formula | What it means |
|---|---|---|
| T-bill interest | A × rate | $461.60 at the defaults — the raw coupon on your cash before the IRS takes its cut. |
| T-bills after tax | interest × (1 − federal) | $360.05 at the defaults — federal tax only; state tax is zero by law. |
| CD interest | A × APY | $475.00 at the defaults — the APY already bakes in compounding, so this is the whole gross. |
| CD after tax | interest × (1 − federal − state) | $346.75 at the defaults — taxed twice: federal plus your state’s full bite. |
| T-bill effective rate | T-bills after tax ÷ A | 3.600% at the defaults — the one number that compares directly with the CD’s 3.468%. |
| Winner’s edge | T-bill after-tax − CD after-tax, in pp and dollars | 0.133 pp / $13.30 for T-bills at the defaults — the number to decide on. |
The math treats both products as simple interest over one year — real CD APYs already include compounding, which the formula honors, while real T-bill rolls compound at the next auction’s yield, which this page does not model. The comparison assumes the T-bill rate and the CD APY you enter are both available to you; the 4.75% default is the October 2026 top-of-table figure, not a rate every bank offers. Tax timing differs: T-bill interest is reported in the year the bill matures or is sold, while CD interest is taxable each year as credited (banks report it on Form 1099-INT at $10+). Minimums differ too: T-bills start at $100 at TreasuryDirect or any broker; CD minimums vary by bank and offer. It ignores early-withdrawal penalties on CDs (typically 3–6 months of interest) and ignores what you do with the money between T-bill maturities (reinvestment risk). It models marginal tax rates only, not deductions or phaseouts, and it does not model inflation — a 3.409% after-tax yield is still a loss in real terms if inflation runs hotter. This is educational math, not tax or investment advice.
Bright Side Kit. "T-Bills vs CDs: 2026 After-Tax Verdict | Bright Side Kit." https://brightoolbox.com/t-bills-vs-cds/ Accessed October 23, 2026.Data sourcesFederal law — 31 U.S.C. §3124 — bars states and localities from taxing interest on obligations of the United States. T-bills are U.S. obligations; CDs are bank products. That asymmetry is the calculator’s entire point: in a 5% state it is worth $23.75 on $10,000 at the default rates.
A 1-year CD typically charges 3–6 months of interest for early withdrawal — $119–$238 at 4.75% on $10,000. T-bills can be sold on the secondary market any business day through your broker; you lose no penalty, though the sale price moves with rates. The calculator’s comparison assumes you hold the full year.
Brokerage for almost everyone: you can buy new issues and sell before maturity, auto-roll maturing bills, and hold bills alongside the rest of your money. TreasuryDirect is the government’s own platform — fine for buy-and-hold, but selling there means transferring the bill to a broker first.
Both are effectively risk-free at the scale this calculator compares: CDs carry FDIC insurance up to $250,000 per depositor per bank; T-bills are direct obligations of the U.S. Treasury — the benchmark every other yield is measured against. The safety difference is not what decides this duel; the tax treatment is.
A T-bill ladder: split the cash into 4-week or 13-week bills maturing every month and roll each one — money frees up monthly. A CD ladder: open 1-, 2-, and 3-year CDs and roll each into a new 3-year CD at maturity. Ladders trade a little rate for liquidity; run each rung through this calculator with your state rate.
T-bills: $100 minimum, in $100 increments, at TreasuryDirect or any broker. CDs: minimums vary by bank and offer — $0 to $1,000 and up — so check the specific offer before assuming you qualify. Never accept a worse APY than the tables show just because your bank is convenient.
When the CD’s APY lead is big enough to survive your state tax. At the October 2026 defaults it wins in any state with no income tax (set the state field to 0: CDs by $10.45 on $10,000) and whenever its APY exceeds the T-bill rate by more than roughly your state rate times the T-bill rate — enter both numbers and let the calculator decide your case.
T-bill interest is taxed in the year the bill matures or is sold — a 52-week bill bought now is next year’s tax event. CD interest is taxable each year as it is credited, and banks report it on Form 1099-INT at $10 or more of interest. The calculator compares one year of each, so the timing does not change the verdict — but it does change which tax return the interest lands on.