T-bills and savings bonds in District of Columbia: the tax-equivalent yield
The District taxes income like a state and a city at once, with one schedule for every filing status; interest from Treasury bills and savings bonds is exempt from it.
A CD or savings account in District of Columbia must pay
4.899 %
to match 4.351 % from a T-bill or savings bond, which District of Columbia cannot tax.
| Federal marginal rate (2026 brackets) | 24 % |
| District of Columbia marginal rate | 8.50 % |
| State and local tax saved per $10,000 a year | $36.98 |
Worked out by Radif Partners · How we calculate · schedule read on the District of Columbia revenue department site, tax year 2026
A District resident with $200,000 of taxable income pays 8.5 % to the Office of Tax and Revenue on each extra dollar of bank interest, and 24 % federal tax if single. Treasury bill and U.S. savings bond interest is free of District income tax under federal law. The 26-week bill auctioned on October 13, 2026 yields 4.351 %; a CD or money market account has to pay 4.899 % to leave as much after both taxes. If you itemize and deduct District tax on Schedule A within the federal cap, the equivalent is 4.755 % instead. Every $10,000 in bills for a year at that yield saves $36.98 of District tax. The schedule, the same for single filers, married couples and heads of household, is not indexed for inflation, so the 8.5 % rate covers everything from $60,000 to $250,000. There is no separate local tax: the District is a single jurisdiction.
One table for everybody
Many states give married couples wider brackets than single filers. The District does not: a couple filing jointly and a single person with the same taxable income pay the same rate. For two earners, this means the household reaches the 8.5 % rate at a combined $60,000, a threshold that two modest salaries pass easily.
| Rate | Taxable income from | Up to |
|---|---|---|
| 4 % | $0 | $10,000 |
| 6 % | $10,000 | $40,000 |
| 6.5 % | $40,000 | $60,000 |
| 8.5 % | $60,000 | $250,000 |
| 9.25 % | $250,000 | $500,000 |
| 9.75 % | $500,000 | $1,000,000 |
| 10.75 % | $1,000,000 | and above |
At the top, 10.75 % applies above $1,000,000, a rate shared with New Jersey; only 3 states have a higher top rate in our table.
The long 8.5 % band
Between $60,000 and $250,000 of taxable income the District rate does not move. Lawyers, federal contractors and couples with two government salaries often fall inside it. For such a household, $50,000 held for a year in a savings account paying the bill's yield of 4.351 % would cost $184.92 in District tax. Held in Treasury bills at the same yield, it costs nothing in District tax, and the federal tax is the same in both cases.
A Capitol Hill couple and a K Street partner
A married couple on Capitol Hill with $120,000 of joint taxable income is in the 8.5 % District bracket and the 22 % federal one. To match the 26-week bill, their savings account would have to pay 4.883 %, and $10,000 in bills saves $36.98 a year. A single law firm partner with $1,200,000 of taxable income who holds 52-week bills, last auctioned on September 29, 2026 at 4.616 %, pays the top 10.75 % and 37 % federally. The CD that equals his bill must pay 5.566 %; each $10,000 saves $49.62 of District tax.
Itemizing changes the arithmetic
When District tax is deducted on federal Schedule A and you stay below the cap on state and local tax deductions, part of the District tax comes back as lower federal tax. The taxable equivalent then becomes the bill yield divided by one minus the District rate, without the federal factor. Turn the option on below to compare both cases at your own income.
District of Columbia: with and without the Schedule A deduction
A CD or savings account in District of Columbia must pay
4.755 %
| Federal marginal rate (2026 brackets) | 22 % |
| District of Columbia marginal rate | 8.50 % |
| State and local tax saved per $10,000 a year | $36.98 |
Schedule I of Form D-40
Your federal adjusted gross income already includes your Treasury interest. On the District return it comes back out on Schedule I of Form D-40, the schedule of subtractions from federal income. Savings bond interest that you report federally the year you cash the bonds is a U.S. obligation too, protected by 31 U.S.C. 3124 (U.S. Code). Across the line, Maryland adds a county tax to its state tax; for the federal side of savings bonds, see savings bond taxes.