T-bills and savings bonds in Minnesota: the tax-equivalent yield
Minnesota's four rates run up to 9.85 %, and its subtraction for U.S. bond interest covers Treasury bills and savings bonds but not every security with "federal" in its name.
A CD or savings account in Minnesota must pay
4.852 %
to match 4.351 % from a T-bill or savings bond, which Minnesota cannot tax.
| Federal marginal rate (2026 brackets) | 24 % |
| Minnesota marginal rate | 7.85 % |
| State and local tax saved per $10,000 a year | $34.16 |
Worked out by Radif Partners · How we calculate · schedule read on the Minnesota revenue department site, tax year 2026
Single filers in Minnesota with $130,000 of taxable income pay 7.85 % in state tax on an extra dollar of CD or savings account interest, and 24 % in federal tax. The same dollar earned on a Treasury bill or a U.S. savings bond owes Minnesota nothing. With the 26-week bill auctioned on October 13, 2026 at 4.351 %, the taxable yield that leaves an equal amount after both taxes is 4.852 %. Each $10,000 held in bills for a year at that rate saves $34.16 of Minnesota income tax. The 2026 brackets come from the Department of Revenue, which indexes them each year and rounds to the nearest ten dollars. Very large investors should know about one more piece: a 1 % Minnesota tax on net investment income above $1,000,000, which our calculator does not include. Interest on mortgage securities from Ginnie Mae, Fannie Mae or Freddie Mac does not qualify for the subtraction.
The 2026 schedule, indexed and rounded
Minnesota adjusts each threshold for inflation every year. The table shows where each rate begins for 2026, and in the last column how much further a joint return can go before reaching the same rate. The gap is not a constant ratio: the joint 6.8 % band is $144,780 wide, far wider than the single one, which spares many two-income couples from the third rate.
| Rate | Single, from | Joint, from | Joint head start |
|---|---|---|---|
| 5.35 % | $0 | $0 | $0 |
| 6.8 % | $33,310 | $48,700 | $15,390 |
| 7.85 % | $109,430 | $193,480 | $84,050 |
| 9.85 % | $203,150 | $337,930 | $134,780 |
What counts as a U.S. bond in Minnesota
The subtraction is for interest on obligations of the United States: Treasury bills, notes and bonds, and Series EE and I savings bonds. It is taken on Schedule M1M, net of any expenses tied to that income. Securities issued by the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are excluded, so their interest stays taxable in Minnesota even though the names sound federal. Read the name of the issuer on the statement before counting a holding as exempt.
The net investment income tax
Since tax year 2024 Minnesota has charged 1 % on net investment income above $1,000,000, reported on Schedule NIIT. It concerns very few households and sits on top of the brackets above. Its base starts from the federal net investment income figure, and we have not confirmed how Minnesota treats U.S. obligation interest inside it, so the calculator leaves this tax out. Below $1,000,000 of investment income it does not apply at all.
Duluth and Edina
A single worker in Duluth with $45,000 of taxable income pays 6.8 % to Minnesota and 12 % federally. To match the bill, his savings account would need 4.715 %, and $10,000 in T-bills keeps $29.59 of state tax a year. A couple in Edina with $350,000 of joint taxable income is in the top 9.85 % bracket and the 24 % federal one; their CD must pay 4.999 %, and the saving on the same $10,000 is $42.86. Change the filing status below to see how the joint schedule moves the answer.
Minnesota break-even rate for a joint return
A CD or savings account in Minnesota must pay
4.999 %
| Federal marginal rate (2026 brackets) | 24 % |
| Minnesota marginal rate | 9.85 % |
| State and local tax saved per $10,000 a year | $42.86 |
Minnesota has no city or county income tax, so the state rate is the whole story. For the federal side of savings bond interest, see savings bond taxes; for another state whose top rate is close to 9.85 %, Oregon.