CD vs Treasury Bills: Which Pays More After State Tax?

CD vs Treasury bills, as of November 12, 2026: in a taxable account in a state with an income tax, the 52-week T-bill pays more. It returns about 4.59% and skips state tax, while the best 12-month CD at a major bank pays 4.45%. The gap matters now: the 10-year yield topped 5.05% on November 12 as traders priced an 89% chance of a December Fed hike.

Key takeaways

• A 52-week T-bill bought at the November 10 rate returns about 4.59%, free of state tax.
• In a 5% tax state, a one-year CD needs about 4.90% just to match that bill.
• At two years, a 5.10% credit union certificate beats the 4.73% Treasury below a 5.7% state tax.

CD vs Treasury bills: which pays more right now?

At one year, the Treasury bill pays more before tax and a lot more after state tax. Treasury’s November 10 data put the 52-week bill at a 4.54% coupon-equivalent yield. Fortune’s November 12 survey of six of the largest US banks found no CD above 4.50%, and the best 12-month offer, Capital One’s, pays 4.45% APY.

The two figures are quoted differently. A CD’s APY includes compounding; Treasury’s coupon-equivalent figure is not what a single one-year purchase earns.

The cleaner test is dollars. The Treasury’s daily bill rates show a 4.34% bank discount on the 52-week bill on November 10. At that price, $10,000 buys about $10,459 of face value and earns $458.96 in 364 days. That is a 4.59% return, the figure to set against a CD’s APY.

Online banks and credit unions narrow the gap. Yahoo Finance’s November 12 roundup named Synchrony’s 15-month CD at 4.60% APY as the day’s top rate. DepositQuest’s list from the same day shows Tower Federal Credit Union at 4.95% on a one-year jumbo certificate, with a $100,000 minimum.

Product	Term	Yield (as of)	Early exit	State income tax
13-week T-bill	3 months	4.22% (Nov 10)	Sell at market price	Exempt
26-week T-bill	6 months	4.41% (Nov 10)	Sell at market price	Exempt
52-week T-bill	1 year	4.54% quoted, 4.59% effective (Nov 10)	Sell at market price	Exempt
Chase CD	8 months	3.50% APY (Nov 12)	Bank penalty	Taxed
Bank of America CD	7 months	3.85% APY (Nov 12)	Bank penalty	Taxed
Citibank CD	12 months	4.25% APY (Nov 12)	Bank penalty	Taxed
Capital One 360 CD	12 months	4.45% APY (Nov 12)	3 months’ interest	Taxed
American Express CD	10 months	4.50% APY (Nov 12)	Bank penalty	Taxed
Synchrony CD	15 months	4.60% APY (Nov 12)	Bank penalty	Taxed
Tower FCU jumbo certificate	274–365 days	4.95% listed, $100k minimum (Nov 12)	Credit union penalty	Taxed

Why did the CD vs Treasury bill math move this week?

Inflation surprised and the bond market repriced the Fed. October CPI, released November 10, rose 0.4% against a 0.3% forecast, and core rose 0.3% against 0.2%. By November 12, the 10-year yield had pushed above 5.05%, a three-week high per Trading Economics, and CME FedWatch showed an 89% chance of a quarter-point December hike.

Short bills moved fast. Treasury’s data show the 52-week bill’s coupon-equivalent yield jumping from 4.37% on November 9 to 4.54% on November 10. The 2-year note’s par yield rose from 4.56% to 4.73% the same day.

The Fed’s target range sits at 3.75%–4.00% after a quarter-point hike in September, and it held on October 28. Governor Christopher Waller had said a core reading around 0.3% or higher would make a half-point December hike worth considering. FedWatch put that half-point outcome at 11% on November 12, according to USAGold’s daily report.

Here is the skeptical part. Bills reprice within hours. Bank CD rates move slowly, and the biggest banks move slowest. Chase’s 8-month CD at 3.50% sits 91 basis points under the 26-week bill. On $10,000, that is about $91 a year left on the table.

How much does state tax cost a CD saver?

More than the headline gap suggests. Treasury interest “is exempt from all state and local income taxes,” according to IRS Publication 550, while CD interest is taxed at every level. In a 5% state, that turns the bill’s $14 pre-tax edge into a $33 after-tax edge on $10,000.

The $10,000 worked example

Start with the bill. The 4.34% discount times 364/360 equals 4.388%, so a $100 bill costs about $95.61. Your $10,000 buys $10,458.96 of face value and pays $458.96 at maturity.

Now the CD. $10,000 at Capital One’s 4.45% APY earns $445.00 over 12 months. Assume a 22% federal bracket and ignore any federal deduction for state tax. Then apply three state rates.

State income tax rate	52-week bill, after tax	12-month CD, after tax	Bill’s edge
0%	$357.99 ($458.96 × 0.78)	$347.10 ($445 × 0.78)	$10.89
5%	$357.99	$324.85 ($445 × 0.73)	$33.14
9%	$357.99	$307.05 ($445 × 0.69)	$50.94

The breakeven CD rate

The CD rate you need is the bill’s 4.59% times (1 − 0.22), divided by (1 − 0.22 − your state rate). That gives 4.59% with no state tax, 4.90% at a 5% state rate and 5.19% at 9%. It is the same logic as the tax-equivalent yield on munis, run in reverse.

Only one one-year offer on the November 12 lists clears 4.90%: Tower FCU’s 4.95% jumbo, which needs $100,000. Timing helps the bill too. The IRS says you “report this interest income when the bill is paid at maturity,” so a 52-week bill bought this month pushes its interest into the 2027 tax year.

When does a CD beat a Treasury bill?

In three cases: when state tax does not apply, when you lock a longer term with a top credit union, or when you hold the CD in an IRA and it simply pays more. At two years, Tower FCU’s 5.10% certificate beats the 4.73% Treasury after tax in any state that taxes below about 5.7%.

The two-year math: the Treasury keeps 4.73% × 0.78, or 3.69% after federal tax. The certificate keeps 5.10% × (0.78 − state rate). The two meet at a state rate of about 5.7%. Below that, the certificate wins on November 12’s rates.

Your situation	Edge	Why
Taxable account, state tax of 5% or more, 1-year horizon	52-week T-bill	A CD needs about 4.90% or more to tie
Taxable account, no state income tax	Whichever pays more pre-tax	Bill at 4.59% beats Capital One’s 4.45%; Tower’s 4.95% jumbo beats the bill
IRA or 401(k)	Highest pre-tax rate	State tax does not apply inside the account
Locking 2 years	Top credit union certificate	5.10% vs 4.73% wins below a 5.7% state rate
Might need the cash early	T-bill	Sell any trading day; no bank penalty
More than $250,000 at one bank	T-bill	FDIC coverage stops at $250,000 per ownership category

Read the fine print on the top CD rates. The best offers on DepositQuest’s November 12 list carry minimums ($100,000 for Tower’s jumbo), caps ($5,000 of new money at NuVision’s 5.00% 7-month certificate) or conditions (INOVA’s 30-month special requires its Shield Checking account). The headline rate is not always a rate you can get.

What do you give up with each?

With a CD you give up flexibility; with a T-bill you give up a fixed exit price. Capital One charges three months of interest to break a 12-month CD, about $110 on $10,000 at 4.45%. A bill can be sold any trading day, but at whatever the market pays that morning.

• Exit cost. Capital One’s 360 CD disclosure sets the penalty at three months of interest for terms of 12 months or less and six months for longer terms, and warns the penalty may exceed the interest you have earned.
• Insurance. The FDIC covers $250,000 per depositor, per insured bank, for each ownership category. Bills are direct obligations of the US government, with no cap. Credit union certificates are covered by NCUA share insurance instead.
• Rate path. A CD locks your rate; a bill makes you roll it. Our 2-year Treasury vs T-bills breakdown runs that reinvestment math.
• Where you buy. Bills come through TreasuryDirect or a broker, each with trade-offs we covered in TreasuryDirect vs brokerage. A T-bill ETF or money market fund skips the rolling but adds a fee.

What to watch next

Three dated events can move bill yields and CD offers before year-end. The Fed’s December decision matters most, because bill yields already price a hike and CD rates usually follow with a lag.

1. November 13, 2026: October producer prices, per Saxo’s calendar. Another hot print would test the 11% odds of a half-point hike.
2. December 8–9, 2026: the FOMC meeting, with a new Summary of Economic Projections. A hike lifts the 3.75%–4.00% range.
3. December 10, 2026: November CPI at 8:30 a.m. ET, per the BLS schedule, the day after the Fed decides.

FAQ

Is a CD or a Treasury bill better right now?

On November 12, 2026 rates, the 52-week bill out-earns every one-year CD from six of the largest US banks after tax. A CD wins only with a rate above the bill’s after-tax breakeven, which is about 4.90% in a 5% tax state.

Do you pay state tax on Treasury bills?

No. IRS Publication 550 says interest on US Treasury obligations is exempt from all state and local income taxes. You still owe federal income tax, reported in the year the bill matures.

Are Treasury bills safer than CDs?

Both carry very low credit risk. CDs at insured banks are covered up to $250,000 per depositor, per bank, per ownership category. Bills are backed directly by the US government with no limit, which matters above that amount.

What happens if I need my money before a CD matures?

You pay a penalty. At Capital One it is three months of interest on terms of 12 months or less, about $110 on $10,000 at 4.45%. A T-bill can be sold before maturity at the market price instead.

Should I wait for the December Fed meeting before buying?

Bill yields already price most of the expected hike: FedWatch showed an 89% chance of a quarter point on November 12. Waiting only pays if the Fed does more than markets expect, which nobody can promise.

How do I compare a T-bill yield with a CD’s APY?

Convert both to dollars on the same amount. At the November 10 discount rate, $10,000 in a 52-week bill earns $458.96, or 4.59%. A 4.45% APY CD earns $445 on the same $10,000.

The bottom line

For one-year cash in a taxable account in a state with an income tax, the T-bill is the better-paying product on this week’s numbers. In a 5% state, a CD needs 4.90% to tie, and none of the six large banks Fortune surveyed offers more than 4.50%.

The CD wins in three specific spots: no state income tax and a rate above 4.59%; a tax-sheltered account where it simply pays more; or a two-year credit union certificate at 5.10% in a state that taxes below about 5.7%. Everything else is the bank’s margin, not yours. Recheck the numbers after the Fed decides on December 9.

This article is journalism, not investment advice. Do your own research before investing.

Sources

• US Treasury: Daily Treasury Bill Rates, November 2026
• US Treasury: Daily Treasury Par Yield Curve Rates, November 2026
• IRS Publication 550: Investment Income and Expenses
• Capital One: 360 CD account disclosures
• FDIC: Deposit Insurance
• Federal Reserve: FOMC meeting calendars
• BLS: Consumer Price Index release schedule
• Fortune: Top CD rates from major banks, November 12, 2026
• Yahoo Finance: Best CD rates today, November 12, 2026
• DepositQuest: Best Nationally Available CDs, November 12, 2026
• StockAnalysis: US consumer prices rise 0.4% in October
• Trading Economics: US 10-year Treasury yield
• USAGold: Daily market report, November 12, 2026 (CME FedWatch odds)
• Saxo: Market Quick Take, November 11, 2026

Wealth Engine researches and drafts with AI tools and checks every figure against the sources above. How we report.