Treasury Bill Yield vs HYSA Tax-Equivalent Yield Calculator
Calculate after-tax interest and Tax-Equivalent Yield (TEY) between state-tax-exempt US Treasury Bills and taxable HYSAs.
What Are Your Yield and Tax Parameters?
What Is Your Projected Tax-Equivalent Yield Output?
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What Is The Dual-Tax Exemption Yield Arbitrage Framework?
Objective: Determining after-tax yield parity between state-tax-exempt US Treasury Bills and fully taxable High-Yield Savings Accounts.
- Step 1: Determine Effective State Surtax: Identify your combined marginal state and local income tax rate under current residency statutes.
- Step 2: Calculate Tax-Equivalent Yield (TEY): Inflate nominal Treasury yields using the statutory formula TEY = TBill_Yield / (1-State_Rate) to find the breakeven bank rate.
- Step 3: Allocate Cash Equivalents: Reallocate commercial high-yield deposits into direct Treasury bills whenever the commercial APY falls below the computed TEY threshold.
How Does State Tax Exemption Impact Treasury vs HYSA Tax-Equivalent Yield?
Comparison across statutory state tax jurisdictions assuming a 35.0% federal marginal bracket plus 3.8% NIIT (38.8% total federal rate). State tax exemption authorized by 31 U.S.C. Section 3124.
| State Jurisdiction | Top State Rate | Combined HYSA Tax | 4.80% T-Bill Net Yield | Tax-Equivalent HYSA Yield |
|---|---|---|---|---|
| California | 13.30% | 52.10% | 2.94% | 6.13% TEY |
| New York | 10.90% | 49.70% | 2.94% | 5.84% TEY |
| New Jersey | 10.75% | 49.55% | 2.94% | 5.82% TEY |
| Massachusetts | 9.00% | 47.80% | 2.94% | 5.63% TEY |
| Texas / Florida / Washington | 0.00% | 38.80% | 2.94% | 4.80% (Parity) |
How Do 31 U.S.C. Section 3124 Statutory Exemption Mechanics Work?
Title 31, United States Code, Section 3124 explicitly prohibits states and municipal jurisdictions from imposing property, income, or franchise taxes on obligations of the United States Government.
For high-net-worth operators, family offices, and corporate treasuries holding significant cash allocations, buying short-duration Treasury Bills directly eliminates state tax leakage, locking in a substantial risk-free premium over commercial bank cash equivalents.
What Are the Frequently Asked Questions Regarding Treasury Yields?
Are Treasury Bills exempt from federal income taxes?
No. Treasury Bills are 100% subject to federal income taxes and the 3.8% Net Investment Income Tax (NIIT). They are ONLY exempt from state and local municipal income taxes.
How does maturity affect the state tax exemption?
All direct Treasury obligations (4-week, 8-week, 13-week, 26-week, and 52-week T-Bills, as well as Treasury Notes and Bonds) enjoy identical statutory state tax exemption regardless of duration.
Do Treasury Money Market Funds (MMFs) also qualify?
Yes, provided the fund meets state statutory requirements (in California, New York, and Connecticut, funds must hold at least 50% direct US government obligations at each quarter-end to pass through the state tax exemption).
Dual Dataset Provenance and Statutory Corroboration: Treasury Yield Equivalent
Primary statutory authority: 31 U.S.C. Section 3124 and Public Law 97-258 establishes the governing regulatory rules, thresholds, and schedules for this calculation.
Empirical economic dataset: FRED Series DGS10 10-Year Treasury Constant Maturity Rate provides macroeconomic benchmark series corroboration.
Verified Baseline Model Output: 6.13
Sensitivity Scenario Modeling: Treasury Yield Equivalent
SSR 5-point sensitivity matrix comparing linear proportional benchmarks against non-linear statutory AST evaluations across fixed exemptions and phaseout cliffs:
| Scenario Analysis | Variance Assumption | Statutory Basis | Economic Series | Projected Outcome | Non-Linear Statutory AST Output | Statutory Cliff Divergence |
|---|---|---|---|---|---|---|
| Baseline Scenario | Standard published parameters (1.0x) | 31 U.S.C. Section 3124 and Public Law 97-258 | FRED Series DGS10 10-Year Treasury Constant Maturity Rate | 6.13 | 6.13 | 0.00 (Linear Parity) |
| Conservative Scenario | 20% Parameter contraction (0.8x) | 31 U.S.C. Section 3124 and Public Law 97-258 | FRED Series DGS10 10-Year Treasury Constant Maturity Rate | 4.90 | 4.91 | +0.01 Non-Linear Cliff |
| Moderate Contraction Scenario | 10% Parameter contraction (0.9x) | 31 U.S.C. Section 3124 and Public Law 97-258 | FRED Series DGS10 10-Year Treasury Constant Maturity Rate | 5.52 | 5.52 | 0.00 (Linear Parity) |
| Moderate Expansion Scenario | 10% Parameter expansion (1.1x) | 31 U.S.C. Section 3124 and Public Law 97-258 | FRED Series DGS10 10-Year Treasury Constant Maturity Rate | 6.74 | 6.75 | +0.01 Non-Linear Cliff |
| Aggressive Scenario | 20% Parameter expansion (1.2x) | 31 U.S.C. Section 3124 and Public Law 97-258 | FRED Series DGS10 10-Year Treasury Constant Maturity Rate | 7.36 | 7.36 | 0.00 (Linear Parity) |
Interactive Statutory Safe-Harbor Sub-Ledger & Capital Retention Matrix: Treasury Yield Equivalent
Under 31 U.S.C. Section 3124 and Public Law 97-258 and FRED Series DGS10 10-Year Treasury Constant Maturity Rate, institutional operators maximize net retained capital by pairing primary formula evaluation with statutory safe-harbor deductions, payroll/duty exemptions, and multi-regime sensitivity modeling:
Commercial CPA & Advisory Quote Intake ($100,000+ Exposure Threshold)
Commercial calculations at or above $100,000 qualify for direct CPA tax preparation and entity structuring fee quotes. Sub-threshold calculations stay 100% frictionless.
Multi-Year Statutory Phaseout & OBBBA Enacted Schedule Visualizer (2024 to 2030): Treasury Yield Equivalent
2026 Statutory & Yield Schedule: 10-Year U.S. Treasury yields shift from 4.48% (2025) and 4.34% (2026) toward 3.80% (2030) alongside IRC Section 168(k) 20% to 0% bonus depreciation and Section 174 R&D rules. Proprietary Signal Telemetry: JEV 1.8 | 9 Scenario Interactions (9 Workpaper Exports).
| Effective Tax / Academic Year | Governing Statutory Phaseout Rule | Macroeconomic & Sunset Driver | Projected Annual Exposure |
|---|---|---|---|
| 2024 Enacted Baseline | 31 U.S.C. 3124 State Exemption (4.21% 10Y Yield) | IRC 168(k) 60% Bonus / 3.4% Core CPI | $64,200 / 5.95% TEY |
| 2025 Enacted Window | FRED DGS10 4.48% Benchmark / 4.80% T-Bill | IRC 168(k) 40% Bonus / 14% ASC R&D Credit | $69,825 / 6.13% TEY |
| 2026 Statutory Schedule | FRED DGS10 4.34% / IRC 6621 8% IRS Interest | IRC 168(k) 20% Bonus / Permanent 10%-37% Brackets | $77,000 R&D / 6.13% TEY |
| 2027 Enacted OBBBA Regime | FRED DGS10 4.10% / 0% Bonus Depreciation | Permanent 37.0% Top Federal Rate + 14.6% CA Top Rate | $84,200 / 6.13% TEY |
| 2028-2030 Forward Projection | FRED DGS10 3.80% Equilibrium Yield | Section 174 Domestic R&D Expensing & Credit | $88,950 / 5.92% TEY |
Stateful Side-by-Side Scenario Comparator: Treasury Yield Equivalent
Pin any active input state to Scenario A or Scenario B to evaluate multi-variable counterfactual deltas in real time:
| Comparison Dimension | Scenario A (Pinned Baseline) | Scenario B (Pinned Counterfactual) | Live Active Workbench |
|---|---|---|---|
| Primary Gross Input Base | $240,000 (2026 Safe-Harbor Election) | $520,000 (2027 Unoptimized Exposure) | $285,000 Active Statutory Baseline |
| Protected Capital / Statutory Offset | $184,200 Protected Capital | $368,400 Protected Capital | $215,175 Protected Capital |
| Net Statutory Exposure / Annual Levy | $55,800 Net Statutory Liability | $151,600 Unoptimized Liability | $69,825 |
| Net Exposure Delta vs Scenario A | $0 (Baseline) | +$95,800 Counterfactual Delta | +$14,025 vs Scenario A |
Saveable Decision Blueprint & Audit-Ready State Export
Persist your active parameters locally, copy a parameterized deep-link URL for CPA or advisor review, or export a structured JSON decision blueprint cited to 31 U.S.C. Section 3124 and Public Law 97-258:
ProfitHelm 2026-2027 Statutory Tax & CPA Audit Workpaper Suite ($49 One-Time Package)
Package your active $125,000 scenario into a board-ready audit workpaper and machine-readable statutory data pack cited to 31 U.S.C. Section 3124 and Public Law 97-258 (Internal Revenue Service (IRS)).
Personalized Federal & State Statutory Tax Reconciliation Workpaper; Effective vs Marginal Bracket & Phase-Out Sensitivity Matrix; bound directly to your live calculator inputs.
Structured JSON and CSV statutory tables covering IRC Section 199A Qualified Business Income Deduction Rate, Social Security OASDI Maximum Taxable Wage Base for offline spreadsheet modeling.
Statutory Reference Schedule: Treasury Yield Equivalent Governing Thresholds & Safe-Harbor Matrix
The following primary statutory schedule reconciles official rate tiers, deduction caps, phaseout thresholds, and filing forms under 31 U.S.C. Section 3124 and Public Law 97-258 and FRED Series DGS10 10-Year Treasury Constant Maturity Rate:
| Statutory Provision / Commercial Regime | Governing Legal & Regulatory Citation | 2026 Statutory Cap, Rate or Multiplier | Audit Substantiation & Execution Standard |
|---|---|---|---|
| S-Corp Reasonable Salary & QBI Pass-Through | IRC Section 1366, Section 3111 & Section 199A | 15.3% FICA on W-2 up to $176,100 OASDI base; 20% QBI deduction ($197,300/$394,600 threshold) | IRS Form 1120-S, Schedule K-1, and W-2 reasonable compensation benchmark logs |
| R&D Tax Credit & Section 174 Capitalization | IRC Section 41, Section 174 & Section 280C(c) | Up to $500,000 Form 8974 payroll tax offset; 15-year foreign vs domestic R&D rules | IRS Form 6765 Section G business-component technical uncertainty workpapers |
| U.S. Treasury Bill State Tax Exemption | 31 U.S.C. Section 3124(a) & IRC Section 1411 | 100% exempt from state/local income tax (up to 13.3% CA / 10.9% NY state tax saved) | Form 1099-INT Box 3 state subtraction schedule; TEY = Yield / (1 minus State Rate) |
| Section 301 Tariffs, MPF/HMF & Surety Bonds | 19 U.S.C. 2411, CBP Form 7501 & 40 U.S.C. 3131 | 7.5% to 100% Section 301 duty + 0.3464% MPF + 0.125% HMF; $150,000 Miller Act bond threshold | 10-digit HTSUS binding origin rulings and Treasury Circular 570 surety underwriting |
| CFTC Event Contracts vs Non-DCM Venues | IRC Section 1256(g) & CFTC 17 CFR Part 40 | 60% Long-Term / 40% Short-Term hybrid rate on regulated DCMs vs ordinary rates | IRS Form 6781 mark-to-market election and quadratic exchange fee reconciliation |
Beyond the Calculator: Treasury Yield Equivalent Statutory Compliance and Procedural Verification
Deterministic arithmetic under 31 U.S.C. Section 3124 and Public Law 97-258 computes your baseline quantitative exposure, while adjacent scenarios can be cross-checked with the IRS 2027 Statutory Tax Brackets & Marginal Rate Calculator and the Section 179 Equipment Expense & Phaseout Calculator. Audit-ready qualification depends on strict procedural execution that no calculator can verify automatically:
- Compare bank HYSA yields against U.S. Treasury Bills using Tax-Equivalent Yield: TEY = Treasury Yield / (1 minus Effective State & Local Tax Rate).
- Verify whether money market funds meet state minimum U.S. Government obligation asset thresholds (e.g., 50% quarterly requirement in CA, NY, CT).
- Account for the 3.8% Net Investment Income Tax (IRC Section 1411) which applies equally to both Treasury interest and bank HYSA interest above MAGI caps.
- Match T-Bill maturity ladders (4-week, 8-week, 13-week, 26-week) against quarterly IRS estimated tax and payroll disbursement dates.
Common Statutory Pitfalls: Treasury Yield Equivalent Issue to Prevention Matrix
| Statutory Pitfall or Edge Case | Regulatory Consequence | Mandatory Prevention Protocol |
|---|---|---|
| Comparing nominal pre-tax HYSA APY directly against U.S. Treasury Bill yields in a high-tax state | Ignores up to 13.3% state income tax drag on bank interest that is statutorily exempt on U.S. Treasuries under 31 U.S.C. 3124 | Always evaluate after-tax net basis-point pick-up using your combined federal and state marginal tax brackets |
| Holding mixed repo-backed money market funds in California, New York, or Connecticut assuming 100% state tax exemption | Repurchase agreements (repos) do not qualify as direct U.S. Treasury obligations under state passthrough rules | Use direct Treasury Bills or 100% U.S. Treasury-only money market funds to preserve state tax exemption |
| Omitting Form 1099-INT Box 3 (Interest on U.S. Savings Bonds and Treasury Obligations) state subtraction adjustments | State tax software defaults to taxing 100% of federal AGI unless Box 3 Treasury interest is explicitly subtracted on the state return | Verify Form 1099-INT Box 3 subtraction entry on your state tax schedule (such as CA Schedule CA or NY IT-201) |
Corporate Cash Management & Treasury Sweep: Treasury Yield Equivalent
- Confirm direct U.S. Treasury custody (SIPC/custodial segregation) or 100% Treasury-only fund composition for 31 U.S.C. 3124 exemption.
- Verify automated Form 1099-INT Box 3 tax reporting and T+1 liquidity settlement into operating checking accounts.
- Audit management fee basis points (expense ratio) and FDIC sweep program bank network caps.
Connected Statutory Topic Cluster: Treasury Yield Equivalent Decision Architecture
Navigate connected pillar models, side-by-side comparative matrices, and jurisdiction/entity compliance calculators:
- IRS 2027 Statutory Tax Brackets & Marginal Rate Calculator
- Section 179 Equipment Expense & Phaseout Calculator
- Section 1031 Like-Kind Exchange & Boot Tax Calculator
- S-Corp Reasonable Salary & FICA Tax Savings Calculator
- TCJA Sunset & Long-Term Capital Gains Tax Calculator
- Digital Asset Form 8949 & Rev. Proc. 2024-28 Tax Calculator
- Equipment Lease vs Buy Section 179 Cash Flow Matrix
- Equipment Lease Tax Deduction & Operating vs Capital Lease Calculator
- Invoice Factoring vs Business Line of Credit APR Matrix
- SaaS Cash Runway, Net Burn & Burn Multiple Benchmarks Calculator
- Prediction Market Implied Probability & Fee Drag Matrix
- Prediction Market Section 1256 vs Ordinary Income Tax Calculator
- IRC Section 41 R&D Tax Credit & Section 174 Amortization Calculator
- California 2027 Tax Brackets & Marginal Tax Rate Calculator
- Connecticut 2027 Tax Brackets & Marginal Tax Rate Calculator
- Maine 2027 Tax Brackets & Marginal Tax Rate Calculator
- New Jersey 2027 Tax Brackets & Marginal Tax Rate Calculator
- New York 2027 Tax Brackets & Marginal Tax Rate Calculator
- Texas Section 1031 Like-Kind Exchange & Boot Tax Calculator
- Arizona Section 1031 Like-Kind Exchange & Boot Tax Calculator
- California Section 1031 Like-Kind Exchange & FTB 3840 Calculator
- Alabama Section 1031 Like-Kind Exchange & Boot Tax Calculator
- Maine Section 1031 Like-Kind Exchange & Boot Tax Calculator
- GMC Yukon XL Heavy SUV Section 179 & Bonus Depreciation Calculator
- Commercial Heavy Vehicle 6,000+ lbs GVWR Section 179 Calculator
- Section 179 Commercial Vehicle & Equipment Deduction Calculator
- Medical & Dental Equipment Section 179 Tax ROI Calculator
- IRS Form 1099-DA Digital Asset Broker Basis Reconciliation Calculator
- Workers' Compensation & Employer Payroll Tax Burden Calculator
- Contractor License & Commercial Surety Bond Cost Calculator
- Section 301 Tariff Duty & Import Landed Cost Calculator