T-Bill Break-Even Calculator (What CD Rate Beats a T-Bill After Tax?)
Your T-Bill skips state tax — but does it actually beat the CD your bank is offering? Enter both rates and your tax details to find the exact CD rate needed to match or beat your T-Bill after all taxes.
💡 In high-tax states, a 5% T-Bill can require a CD above 6% to match after taxes.
Minimum $1,000. This is the amount you get back at maturity.
Check latest rate → TreasuryDirect.gov
APY your bank is offering on a CD or savings account.
CA = 13.3%, NY = 10.9%, TX/FL = 0%. T-Bills are state-tax exempt — CDs are not. Find your rate →
How to Use the Break-Even Calculator
- Enter your investment amount
- Add your T-Bill rate and duration
- Enter your CD or savings rate
- Select your federal and state tax rates
The calculator shows the exact CD rate required to match your T-Bill after taxes.
How the Break-Even Rate Works (Step-by-Step Example)
The formula :
- T-Bill you keep = Profit × (1 − Federal Rate) — state tax exempt
- CD you keep = Profit × (1 − Federal Rate) × (1 − State Rate)
- Break-even CD rate = T-Bill you keep ÷ ((1 − Fed) × (1 − State)) ÷ Investment × (365 ÷ Days) × 100
Your T-Bill:
Profit = $10,000 × 4.5% × (182/360) = $227.50
Federal tax = $50.05 State tax = $0 (exempt)
You keep = $177.45
Your CD (same rate, same period):
Profit = $10,000 × 4.5% × (182/365) = $224.38
Federal tax = $49.36 State tax = $29.84
You keep = $145.18
T-Bill wins by $32.27
Break-even CD rate:
$177.45 ÷ ((1−0.22) × (1−0.133)) ÷ $10,000 × (365/182) × 100 = 5.85%
Your bank must offer 5.85% on a CD to match your 4.5% T-Bill after all taxes.
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.
Related Calculators
Learn more: What Are Treasury Bills — Complete Guide · Are T-Bills Worth It? · Best T-Bill Duration Guide
Frequently Asked Questions (FAQ)
What is the T-Bill break-even rate?
The T-Bill break-even rate is the CD or savings rate needed to match your T-Bill after taxes. Because T-Bills are exempt from state tax, the required CD rate is usually higher in states with income tax.
How do I know if my CD beats my T-Bill?
Your CD beats a T-Bill if its rate is higher than the break-even rate. If the CD rate is below that level, the T-Bill provides better after-tax returns.
Does the break-even rate change by state?
Yes, the break-even rate changes based on your state tax rate. Higher state taxes increase the advantage of T-Bills, which raises the CD rate required to match them.