T-Bill Break-Even Calculator
T-Bills save you state tax — but is your T-Bill rate actually better than the CD your bank is offering? Enter your details to find the exact CD rate that would beat your T-Bill after all taxes.
TreasuryDirect minimum is $100 (in $100 increments). Most brokerages require $1,000.
The discount rate from your T-Bill auction result on TreasuryDirect.
Choose the duration matching your T-Bill purchase.
Enter the APY your bank is offering on a CD or high-yield savings account.
Use your marginal (top) bracket from your last tax return.
T-Bills are 100% exempt from state tax. CDs are not — this is what gives T-Bills the edge. Examples: CA = 13.3%, NY = 10.9%, TX/FL = 0%. Find your rate →
What is the T-Bill Break-Even Rate?
The break-even rate is the minimum CD or savings account rate you would need to earn more than your T-Bill after paying all applicable taxes. Because T-Bills are exempt from state and local taxes, a T-Bill at 5% often beats a CD at 5.5% for investors in high-tax states.
T-Bill vs CD After Tax — How It's Calculated
- T-Bill After-Tax Earnings = Gross Earnings × (1 − Federal Rate)
- CD After-Tax Earnings = CD Gross Earnings × (1 − Federal Rate) × (1 − State Rate)
- Break-Even CD Rate = T-Bill After-Tax Yield ÷ (1 − Federal Rate) ÷ (1 − State Rate)
Any CD rate below the break-even rate means the T-Bill wins after taxes. Any CD rate above it means the CD wins.
T-Bill vs CD After Tax in High-Tax States
In California (13.3% state tax), a T-Bill at 5% has a break-even CD rate of around 6.6% at the 22% federal bracket. That means your bank's CD needs to offer more than 6.6% just to match your T-Bill — which is rare. In states with no income tax, the advantage is smaller and purely driven by federal tax treatment.
Are T-Bills Always Better Than CDs?
Not always. T-Bills require purchasing through TreasuryDirect or a brokerage, have fixed durations, and are sold at auction. CDs from FDIC-insured banks are simpler and sometimes offer promotional rates that beat T-Bills even after the tax advantage. Always compare using your actual rates and tax situation.
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Learn more: What Are Treasury Bills — Complete Guide · Are T-Bills Worth It? · Best T-Bill Duration Guide
Frequently Asked Questions
What is the T-Bill break-even rate?
The break-even rate is the minimum CD or savings account rate needed to earn more than your T-Bill after all taxes. Because T-Bills skip state tax, the break-even CD rate is always higher than the T-Bill rate in states with income tax. In states with no income tax, the break-even rate equals the T-Bill yield.
How do I know if my CD beats my T-Bill?
Compare the CD rate to the break-even rate shown in this calculator. If the CD rate is above the break-even rate, the CD wins after all taxes. If it is below, the T-Bill wins. In most high-tax states, CDs need to offer 0.5–1% more than T-Bills just to break even.
Does the break-even rate change by state?
Yes — significantly. In California (13.3% state tax), a 5% T-Bill has a break-even CD rate of approximately 6.3% at the 22% federal bracket. In Texas or Florida (0% state tax), the break-even CD rate is approximately 6.4% — driven purely by the federal tax difference.