New York City Resident Combined (10.9% State + 3.876% NYC = 14.78%) 31 U.S.C. § 3124 Exempt 14.78% Tax Shelter

New York City T-Bills vs HYSA Calculator: State & City Tax Shelter

New York City residents face dual-tier state and local taxation: up to 10.9% New York State income tax plus 3.876% NYC municipal resident tax, totaling 14.776%. Direct U.S. Treasury obligations shield 100% of interest from both NY State and NYC local tax. Under 31 U.S.C. Section 3124, Treasury interest is legally immune from taxation by state and municipal authorities. NYC residents save both New York State income tax (up to 10.9%) and NYC municipal resident income tax (3.876%), creating a combined 14.78% tax shelter.

Compare Other High-Tax States:

California (13.3%) New York City (14.8%) New York State (Outside NYC) (10.9%) Massachusetts (9.0%) New Jersey (10.8%)

Cash & Yield Inputs

Cash Balance $100,000

$10k $250k $500k $1M

U.S. T-Bill Nominal Yield 4.65%

Bank HYSA Advertised APY 4.25%

Federal Marginal Bracket

⚖️ Federal Preemption: 31 U.S.C. § 3124

Under federal law, states and municipalities are constitutionally barred from taxing interest earned on direct U.S. Treasury bills. In New York City, your effective state tax rate on T-Bills is exactly 0.00%.

Tax-Equivalent Yield (TEY) in New York City

5.46% Your bank HYSA must pay at least 5.46% APY to match a 4.65% T-Bill after paying New York City taxes.

Net Annual Cash Delta +$880 in pocket

State Tax Eliminated $628 saved/yr

Yield & Tax Deductions: Direct Comparison

Metric	U.S. Treasury Bill	Bank HYSA	Advantage
Gross Annual Yield	4.65%	4.25%	+0.40% T-Bill
New York City Tax Rate	0.00% (Exempt)	14.78%	T-Bill (-14.78% Tax)
Gross Annual Interest	$4,650	$4,250	+$400
State & Local Tax Owed	$0.00	-$628	+$628 saved
Net After-Tax Cash	$2,930	$2,050	+$880
Net After-Tax Yield	2.93%	2.05%	+0.88%
Liquidity & Safety	US Government Credit (No Cap)	FDIC Insured ($250k Cap/Bank)	T-Bill Unlimited Safety

Multi-Balance Cash Matrix (New York City)

Exact dollar amounts earned and tax saved across deposit tiers at current yields.

Deposit Balance	T-Bill Net Cash	Bank HYSA Net Cash	State Tax Lost	Net Cash Advantage
$25,000	$732	$512	$157	+$220
$50,000	$1,465	$1,025	$314	+$440
$100,000	$2,930	$2,050	$628	+$880
$250,000	$7,324	$5,124	$1,570	+$2,200
$500,000	$14,648	$10,248	$3,140	+$4,400
$1,000,000	$29,295	$20,495	$6,280	+$8,800

Automate Your Fixed Income Strategy

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❓ Common Questions

Frequently Asked Questions: New York City T-Bills vs HYSA

Answers on state tax exemptions under 31 U.S.C. 3124 and Tax-Equivalent Yield math.

Are Treasury bills exempt from New York City municipal income tax?

Yes, under 31 U.S.C. Section 3124, interest earned on U.S. Treasury bills is exempt from both New York State income tax and the 3.876% New York City resident local income tax.

What is the NYC Tax-Equivalent Yield for Treasury bills?

The NYC Tax-Equivalent Yield formula is Nominal Yield divided by (1 minus 0.14776). For example, a 4.65% Treasury bill delivers the same after-tax cash as a 5.46% APY bank account for a top-bracket NYC resident.

How much money do NYC high earners save on a $100,000 cash balance?

On $100,000 yielding 4.65%, you earn $4,650 in interest. In a bank HYSA, New York State and NYC take approximately $687 in state and city taxes. With Treasury bills, that $687 stays entirely in your pocket.

Do Treasury money market funds like SNSXX or FDLXX also qualify for NYC tax exemption?

Yes, mutual funds that hold 100% direct U.S. Treasury obligations (such as Vanguard VUSXX, Schwab SNSXX, or Fidelity FDLXX) pass through state and local tax exemption to New York City investors, provided the fund meets state statutory asset thresholds.

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