🏛 How much more would I earn after taxes with a municipal money market fund over a high yield CD?
💼 Parking Your Cash
When deciding where to park cash for the next 6 to 12 months, Rob Berger looks at yield, liquidity, and taxes. A standard CD might pay over 5%. But paying federal and state income taxes on that interest means your actual take-home yield is much lower.
Rob Berger personally thinks municipal money market funds are an excellent option that people do not talk enough about. This calculator compares their after-tax returns against standard savings and Treasuries based on your specific tax brackets.
🏛️ Tax Profile
To compare yields accurately, we need your marginal tax rates. Municipal bonds are exempt from federal taxes, and Treasuries are exempt from state taxes. The higher your tax brackets, the more advantageous these exemptions become.
As Rob Berger puts it, if he invested in a standard account, he might earn an attractive 4.34%, but he would still have to pay state and federal income tax on it. Enter your top brackets below to measure your true tax drag.
📈 Yield Comparison
Enter the current yields for your cash options. Remember that you only avoid state income tax on a municipal fund if it specifically holds bonds issued by your home state. Otherwise, you must treat it as out-of-state.
Rob Berger notes that with these funds, you do not pay federal income tax on municipal bonds. And generally, if the municipal bond is issued by the state you live in, you avoid state income tax as well.
🔗 See Also
Based on content by Rob Berger on Rob Berger (YouTube).
Original: Savings, CDs, T-Bills or Money Market Funds? Where Cash Earns the Most Now
For further related reading, check out:
📊 Results
CD After-Tax
T-Bill After-Tax
Muni After-Tax
Muni vs CD
Top Earner
Muni Fund
Calculator updated by heyfinfam (v26.10.2) · View history
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Where should I park my cash?
Puts a high-yield savings account, a CD, and Treasury bills side by side on after-tax earnings for your cash, factoring in your federal and state tax rates and whether you need the money within a year.
Based on "High Yield Savings vs. Bank CDs vs. Treasury Bonds: Which One is Better for You?" by See the Forest Through the Trees. Treasuries vs. CDs vs. High Yield Savings
How much more yield could I keep after taxes with a tax efficient fund?
Based on "35% Tax vs 1% Tax on the Same Investment? Here's Why" by Wealth Adventures. Does this fund belong in my taxable account or tax-deferred account?