T-bills and savings bonds in New Jersey: the tax-equivalent yield
New Jersey's income tax rates are written into the statute and have not moved since 2020, so the gap between a Treasury bill and a bank CD here depends only on the yield and your bracket.
A CD or savings account in New Jersey must pay
4.749 %
to match 4.351 % from a T-bill or savings bond, which New Jersey cannot tax.
| Federal marginal rate (2026 brackets) | 24 % |
| New Jersey marginal rate | 6.37 % |
| State and local tax saved per $10,000 a year | $27.72 |
Worked out by Radif Partners · How we calculate · schedule read on the New Jersey revenue department site, tax year 2026
At $160,000 of taxable income, a single New Jersey filer pays 6.37 % of Gross Income Tax on each additional dollar of bank interest and 24 % federal tax on it. Treasury bill and savings bond interest is exempt from the state tax under federal law. With the 26-week bill sold on October 13, 2026 at 4.351 %, a certificate of deposit has to pay 4.749 % before it leaves as much after tax. Each $10,000 held a full year at the bill's yield avoids $27.72 of New Jersey tax. The schedule used here is the one the Division of Taxation labels "2020 and After"; rates and thresholds are set by law and not indexed for inflation, so the same table applies in 2026. The jump that matters most comes at $500,000, where the rate moves from 6.37 % to 8.97 %, and again at $1,000,000, where it reaches 10.75 %. New Jersey has no local income tax that reaches interest.
Two schedules that do not line up
A couple filing jointly in New Jersey does not get thresholds that are simply twice the single ones. The joint schedule has its own breakpoints and one extra rate, 2.45 %, starting at $50,000. A single filer, meanwhile, passes through a very short 3.5 % band, from $35,000 to $40,000, before the 5.525 % rate. The Division's note to the schedule says the joint column is also the one for heads of household and qualifying widows or widowers.
| Rate | Single, from | Joint, head of household, from |
|---|---|---|
| 1.4 % | $0 | $0 |
| 1.75 % | $20,000 | $20,000 |
| 2.45 % | no such bracket | $50,000 |
| 3.5 % | $35,000 | $70,000 |
| 5.525 % | $40,000 | $80,000 |
| 6.37 % | $75,000 | $150,000 |
| 8.97 % | $500,000 | $500,000 |
| 10.75 % | $1,000,000 | $1,000,000 |
The calculator on this page follows that note: with the Head status it applies the joint New Jersey schedule for the state rate and the federal head of household brackets for the federal rate, so a head of household gets both rates from one setting. In states that publish no separate schedule, the Head status uses the single one.
Half a million: the step to 8.97 %
Between $75,000 and $500,000 the rate is a steady 6.37 %. Above $500,000 it climbs from 6.37 % to 8.97 % in a single step, which changes the comparison for households with large cash balances. On $10,000 at the current bill yield, that step alone is worth $11.31 a year in tax that a Treasury avoids. Above $1,000,000 the rate is 10.75 %, the same top rate as the District of Columbia.
A nurse in Trenton and a couple in Bergen County
A single nurse with $70,000 of taxable income is in the 5.525 % bracket and the 22 % federal one. A CD must pay 4.683 % to match the T-bill, and $10,000 in bills saves $24.04 of state tax over a year. A married couple filing jointly at $650,000 pays 8.97 % in New Jersey and 35 % federally; their break-even is 5.048 %, and the same $10,000 saves $39.03.
Savings bonds cashed in New Jersey
When you cash Series EE or I bonds, the whole interest lands on your federal return for that year, often in one lump. New Jersey cannot tax any of it. The small calculator below takes the interest on the bonds you cash and shows both the federal tax and the New Jersey tax a bank account would have cost on the same amount.
Cashing bonds in New Jersey: federal tax and state tax avoided
Federal income tax on this interest
$576
| Federal marginal rate | 24 % |
| Share of the interest | 24.0 % |
| State tax a bank CD would have cost (New Jersey) | $153 |
On the NJ-1040, interest on U.S. obligations stays out of New Jersey taxable income; follow the Division's instructions for the year to see how it is listed. The legal basis is 31 U.S.C. 3124 (U.S. Code). For the city across the river, see New York with the city tax; for the federal rules, savings bond taxes.