T-Bill vs CD Calculator (After-Tax Treasury vs Certificate of Deposit Comparison)
Compare Treasury Bills vs Certificates of Deposit (CDs) after all taxes. While both offer fixed returns, taxes and structure can significantly impact your final earnings.
💡 In high-tax states, T-Bills often outperform CDs — even at the same rate — because they are exempt from state income tax.
Check latest rate → TreasuryDirect.gov
The CD is compared over the same period.
APY from your bank for the same term.
CA = 13.3%, NY = 10.9%, TX/FL = 0%. T-Bills are state-tax exempt — CDs are not. Find your rate →
How to Compare T-Bills vs CDs
- Compare the T-Bill rate vs CD APY
- Apply federal tax to both
- Apply state tax (T-Bills are exempt)
- Compare final after-tax returns
This calculator performs all these steps instantly and shows which investment wins.
The formula (done automatically for you):
- T-Bill profit = Investment × Rate ÷ 100 × Days ÷ 360
- T-Bill tax = Profit × Federal Rate (state tax = $0, always exempt)
- CD profit = Investment × (1 + Rate ÷ N)N × Days ÷ 365 − Investment (N = compounding periods per year)
- CD tax = Profit × Federal Rate + Profit × State Rate
- You keep = Profit − All taxes
T-Bill vs CD — Key Differences That Impact Your Returns
| Feature | T-Bills | CDs |
|---|---|---|
| Issuer | U.S. Government (Treasury) | FDIC-insured bank |
| Safety | U.S. Gov backed — no limit | FDIC insured up to $250,000 |
| Rate Type | Fixed at auction — locked in | Fixed for CD term |
| Federal Tax | ✅ Yes — ordinary income | ✅ Yes — ordinary income |
| State Tax | ✅ Exempt by federal law | ❌ Fully taxable |
| Early Exit | Sell on secondary market (broker) | Penalty — typically 3–6 months interest |
| Min. Investment | $100 on TreasuryDirect | Varies — typically $500–$1,000 |
| Over $250K | ✅ No limit — fully government backed | ❌ Not insured above $250K per bank |
| Auto-Reinvest | ✅ Yes — TreasuryDirect auto-rolls | ✅ Yes — most banks auto-renew |
When Does a T-Bill Beat a CD?
Because T-Bills are exempt from state tax, they have a built-in yield advantage over CDs in states with income tax. The higher your state tax rate, the bigger the T-Bill advantage.
| State | State Tax Rate | CD Rate Needed to Match T-Bill |
|---|---|---|
| Texas / Florida | 0% | 5.77% |
| Pennsylvania | 3.07% | 5.97% |
| New York | 8.82% | 6.36% |
| Oregon | 9.9% | 6.47% |
| California | 13.3% | 6.77% |
When Does a CD Beat a T-Bill?
- You live in a state with no income tax (TX, FL, NV, WA, WY, SD, AK) — the state tax advantage disappears
- A bank is offering a promotional CD rate significantly above current T-Bill rates
- You want longer than 1 year — T-Bills max out at 52 weeks; CDs can lock in rates for 2–5 years
- You prefer the simplicity of a bank product over TreasuryDirect
Worked Example — T-Bill vs CD
T-Bill:
Profit = $10,000 × 4.5% × (182 ÷ 360) = $227.50
Federal tax = $50.05 State tax = $0 (exempt)
You keep = $177.45
CD:
Profit (compound monthly) = $247.95
Federal tax = $54.55 State tax = $32.98
You keep = $160.42
T-Bill wins by $17.03 — even though the CD headline rate is higher. The state tax exemption is the difference.
Find the exact CD rate needed to beat your T-Bill after all taxes.
See your real after-tax T-Bill yield and CD equivalent rate.
Related Calculators
Learn more: What Are Treasury Bills — Complete Guide · Are T-Bills Worth It? · Best T-Bill Duration Guide
Frequently Asked Questions (FAQ)
Are T-Bills better than CDs?
T-Bills are often better than CDs after taxes, especially in high-tax states. They are exempt from state and local taxes, while CDs are fully taxable. In states with no income tax, the difference is smaller and depends on the rates offered.
What is the main difference between T-Bills and CDs?
The main difference is taxation and structure. T-Bills are issued by the U.S. government and are exempt from state tax, while CDs are bank products that are fully taxable. CDs offer FDIC insurance up to $250,000, while T-Bills are backed directly by the U.S. government.
Can I withdraw from a T-Bill early like a CD?
You cannot withdraw a T-Bill early from TreasuryDirect, but you can sell it through a brokerage. Unlike CDs, which charge early withdrawal penalties, T-Bills can be sold on the secondary market, where prices may vary slightly.
Which is better for amounts over $250,000 — T-Bills or CDs?
T-Bills are better for amounts over $250,000 because they have no insurance limit. CDs are only FDIC insured up to $250,000 per bank, while T-Bills are fully backed by the U.S. government.