T-bills and savings bonds in New York: the tax-equivalent yield
New York has two taxes that a Treasury bill sidesteps for city residents: the state income tax and the New York City personal income tax, both of which start from the state return.
A CD or savings account in New York must pay
4.993 %
to match 4.351 % from a T-bill or savings bond, which New York cannot tax.
| Federal marginal rate (2026 brackets) | 24 % |
| New York marginal rate | 5.90 % |
| Local rate | 3.876 % |
| State and local tax saved per $10,000 a year | $42.54 |
Worked out by Radif Partners · How we calculate · schedule read on the New York revenue department site, tax year 2026
For a single filer living in one of the five boroughs with $180,000 of taxable income, the next dollar of bank interest is taxed at 5.9 % by Albany and 3.876 % by the city, 9.776 % in all, before the 24 % federal rate. Interest from Treasury bills and savings bonds pays neither of those two taxes. The latest 26-week bill, auctioned on October 13, 2026, yields 4.351 %; a CD would need 4.993 % to leave the same amount after tax. Outside the city, with the same income, the equivalent drops to 4.717 % because only the state rate applies. On $10,000 held for a year at the bill's yield, a city resident avoids $42.54 of state and city tax, and someone upstate $25.67. The figures use the 2026 New York rate schedule, which already includes the rate cuts on the five lowest brackets voted in 2025, and the 2026 New York City schedule.
The state schedule for 2026
New York lowered the rates of its first five brackets for 2026 under Chapter 59 of the Laws of 2025, and the Department of Taxation and Finance printed the new schedule in its estimated tax instructions (IT-2105-I). Nine brackets remain. The rates above the middle are unchanged, and the top one, 10.9 %, starts at $25,000,000 for single and joint filers alike.
| Rate | Single, from | Married filing jointly, from |
|---|---|---|
| 3.9 % | $0 | $0 |
| 4.4 % | $8,500 | $17,150 |
| 5.15 % | $11,700 | $23,600 |
| 5.4 % | $13,900 | $27,900 |
| 5.9 % | $80,650 | $161,550 |
| 6.85 % | $215,400 | $323,200 |
| 9.65 % | $1,077,550 | $2,155,350 |
| 10.3 % | $5,000,000 | $5,000,000 |
| 10.9 % | $25,000,000 | $25,000,000 |
The city layer, and why it matters for cash
New York City residents pay a second income tax computed on city taxable income. Its base is built from the state return, so the federal interest that leaves the state return leaves the city one too. The city schedule is flat in practice: once taxable income passes $50,000 (single) the rate is 3.876 % on everything above. For a cash-heavy household in Manhattan or Queens, that city rate lands on every extra dollar of CD interest on top of the state rate, and none of it on a T-bill.
| City rate | Single, from | Married filing jointly, from |
|---|---|---|
| 3.078 % | $0 | $0 |
| 3.762 % | $12,000 | $21,600 |
| 3.819 % | $25,000 | $45,000 |
| 3.876 % | $50,000 | $90,000 |
Yonkers and the rest of the state
Yonkers residents pay a surcharge of 16.75 % of their net state tax, so it shrinks with the state tax and Treasury interest escapes it as well. Anywhere else in the state, the calculator above applies the state schedule alone, which is what the upstate example below shows.
A Buffalo saver and a Brooklyn couple
A single retiree in Buffalo with $90,000 of taxable income pays 5.9 % to the state and 22 % federally. Her CD has to pay 4.707 % to match the bill, and $10,000 in T-bills saves her $25.67 a year. A married couple in Brooklyn reporting $400,000 jointly faces 6.85 % from the state plus 3.876 % from the city. Their break-even CD rate is 5.066 %, and the same $10,000 saves $46.67. Switch the city answer off in the mini calculator to see how much of the advantage comes from living in the five boroughs.
Upstate or in the city: New York break-even rate
A CD or savings account in New York must pay
4.707 %
| Federal marginal rate (2026 brackets) | 22 % |
| New York marginal rate | 5.90 % |
| State and local tax saved per $10,000 a year | $25.67 |
When the true rate is higher: the recapture worksheets
New York takes back the benefit of its lower brackets once New York adjusted gross income passes $107,650. During that phase-in the tax on one more dollar is higher than the rate printed in the bracket table. Our calculator uses the bracket rate, so in that zone it understates what a CD costs you, and a T-bill's advantage is larger than shown.
Line 28 of Form IT-201
Federal adjusted gross income includes your T-bill and savings bond interest. On the resident return, Form IT-201, it comes back out on line 28, interest income on U.S. government bonds, and the city and Yonkers computations follow from there. For the federal side of the same interest, read how savings bond interest is taxed, and for the neighbor across the Hudson, the New Jersey page.