SGOV, Treasury Bills or High-Yield Savings: What Your Cash Keeps After State Tax

Interest on U.S. Treasury bills is taxed by the federal government but not by any state. Interest on bank deposits and brokerage cash sweeps is taxed by both. Money market funds and ETFs that hold Treasuries sit in between: 36 states exempt the share of a fund's income that came from U.S. obligations; California, Connecticut and New York exempt it only if the fund held at least 50% of its assets in them at the end of every quarter; and for the District of Columbia, Hawaii and Kentucky we found no rule. Nine states do not tax interest at all. This calculator runs your income through your state's own tax rules, not a single rate, so deductions and credits that depend on federal AGI are counted too.

Why Treasury interest skips state tax

Federal law (31 U.S.C. 3124) exempts obligations of the United States and the interest on them from state and local taxation. Every state with an income tax lets you subtract Treasury interest you earn directly, and the table below shows the line on each state's return. The federal government still taxes it as ordinary income.

A fund is different: what it pays you is a dividend, and whether the Treasury part keeps its exemption is up to each state. Most states pass it through in proportion to the fund's income from U.S. obligations. Some ask for a statement from the fund; Virginia expects a breakdown for each distribution, and North Dakota's law requires the fund to file its holdings with the state.

The 50% test in California, Connecticut and New York

These three states exempt a fund's Treasury share only if at least half of the fund's assets were U.S. obligations at the end of each quarter of its tax year. Miss one quarter and every dividend for the year is taxable. New York also leaves repurchase agreements out when it measures the 50%. Fund companies say each year whether a fund met the test. For 2025, Fidelity's Government (SPAXX) and Treasury (FZFXX) money market funds did not, so in those three states their dividends are fully taxable even though half or more of their income came from U.S. obligations.

2025 shares of income from U.S. government obligations

Ticker	Fund	Share of 2025 income	Met the 50% test	Source
VUSXX	Vanguard Treasury Money Market Fund	100.00%	Yes	Sponsor document
VMFXX	Vanguard Federal Money Market Fund	66.61%	Yes	Sponsor document Vanguard's figure is stated for Vanguard Federal Money Market Fund and applies to its settlement fund.
FDLXX	Fidelity Treasury Only Money Market Fund	98.67%	Yes	Sponsor document
FZFXX	Fidelity Treasury Money Market Fund	61.52%	No	Sponsor document Fidelity marks this fund as not meeting the 50% asset test for 2025.
SPAXX	Fidelity Government Money Market Fund	50.90%	No	Sponsor document Fidelity marks this fund as not meeting the 50% asset test for 2025.
SNSXX	Schwab U.S. Treasury Money Fund	99.99%	Yes	Sponsor document
SNVXX	Schwab Government Money Fund	36.20%	No	Sponsor document Schwab does not mark this fund as meeting the 50% asset test for 2025.
SWVXX	Schwab Prime Advantage Money Fund	0.00%	No	Sponsor document A prime fund: Schwab says funds not in its table had 0% income from U.S. government obligations.
SGOV	iShares 0-3 Month Treasury Bond ETF	95.14%	Yes	Sponsor document
BIL	SPDR Bloomberg 1-3 Month T-Bill ETF	97.26%	Yes	Sponsor document State Street's 2025 tax summary lists no state where the 50% test was not met.
SHV	iShares 0-1 Year Treasury Bond ETF	89.80%	Yes	Sponsor document
TFLO	iShares Treasury Floating Rate Bond ETF	99.21%	Yes	Sponsor document

When the state exemption is worth less than it looks

Treasury interest still counts in federal adjusted gross income, and several states use federal AGI to decide who gets a deduction or credit. In those states the interest can raise your state tax even though it is exempt. The calculator counts the ones its tax engine has, including Virginia's age deduction, Vermont's Social Security exclusion and minimum tax, South Carolina's 2026 deduction, Oregon's federal tax subtraction and exemption credit, Rhode Island's Social Security and pension modifications, Illinois's exemption cutoff, Maine's pension deduction, and West Virginia's senior deduction, which the Treasury subtraction itself uses up. Going the other way, Georgia, Delaware, New Jersey and South Carolina let older residents deduct some interest of any kind, so bank interest can also escape state tax.

Posted yields are not all the same kind

• Banks and brokerages post an APY, which already includes compounding.
• Money market funds post a 7-day yield: one week of income stated as a simple annual rate. The SEC's Form N-1A gives the compounding formula, which the calculator applies.
• ETFs post a 30-day SEC yield, which Form N-1A defines with semiannual compounding.
• Treasury bills are quoted as a coupon-equivalent yield for the bill's term; the calculator assumes you buy a new bill at the same rate each time one matures.
• Fund yields look back 7 or 30 days, so they trail rate changes. On September 21, 2026 a 13-week bill paid 4.12%, while SGOV's 30-day SEC yield, as of Sep 18, 2026, was 3.65%.

What the calculator assumes

• Tax year 2026, the standard deduction, and all other income taxed as ordinary income. Married couples file jointly and are the same age.
• The cash earns the yield shown for a full year. Nothing is sold at a gain or loss; Treasury bills are held to maturity.
• The 3.8% net investment income tax applies to the interest above modified AGI of $200,000 ($250,000 joint). No other investment income is assumed.
• Each fund's 2025 share of income from U.S. obligations, and its 2025 result on the 50% test.
• City and county income taxes are not included, except New York City and Yonkers.
• Where a state has no rule for funds (the District of Columbia, Hawaii and Kentucky), fund dividends are treated as taxable.

The rule in every state

State	Fund dividends	Treasury bills you own	Details and sources
Alabama	Share of the fund's income	Exempt: Form 40 Schedule B, Column A.	The part of a fund's dividends that came from interest on U.S. obligations is exempt. Alabama's 2025 booklet lists that share of fund dividends as exempt, but the same booklet also says all dividends are fully taxable. We follow the specific rule. Alabama deducts federal income tax (including the 3.8% net investment income tax), so federal tax on the interest trims Alabama tax slightly. The calculator includes this. Alabama 2025 Form 40 booklet; Ala. Admin. Code r. 810-3-14-.02
Alaska	No tax on interest	No state income tax on interest.	No state income tax on interest.
Arizona	Share of the fund's income	Exempt: Form 140, line 28.	The percentage of a fund's distribution that the fund identifies as exempt can be subtracted. Interest from repurchase agreements is taxable in Arizona, even when the collateral is Treasury securities. Arizona Individual Tax Ruling ITR 02-2; Arizona 2025 Form 140 instructions
Arkansas	Share of the fund's income	Exempt: not included in Arkansas income.	Arkansas's 2025 instructions say interest from government securities paid through a mutual fund is exempt. An Arkansas regulation treats fund distributions as taxable cash dividends. The 2025 instructions say the opposite for government securities; we follow the instructions. Arkansas 2025 AR1000F/AR1000NR instructions
California	Only if the fund met the 50% test	Exempt: Schedule CA (540), Part I, line 2, column B.	Only if the fund held at least 50% of its assets in U.S. (or California) obligations at the end of each quarter of its tax year; then the share the fund reports is exempt. Otherwise all of it is taxable. Repurchase agreements, Fannie Mae, Ginnie Mae and Freddie Mac are not U.S. obligations for California. Cal. Rev. & Tax. Code 17145; California 2025 Schedule CA (540) instructions
Colorado	Share of the fund's income	Exempt: Form DR 0104AD, line 2.	Only the part of a fund's income that comes from exempt U.S. obligations can be subtracted. Interest from repurchase agreements is not exempt. Colorado: U.S. Government Interest
Connecticut	Only if the fund met the 50% test	Exempt: Schedule 1, line 39.	Only if the fund held at least 50% of its assets in obligations federal law protects from state tax at the end of each quarter; then the share the fund reports is exempt. Otherwise all of it is taxable. The fund has to tell shareholders the exempt share in writing within 60 days after its year ends. Repurchase agreements do not count as U.S. obligations. Conn. Gen. Stat. 12-701(a)(20); Connecticut 2025 CT-1040 instructions
Delaware	Share of the fund's income	Exempt: Form PIT-RES, line 5.	The dollar amount or percentage the fund reports as coming from U.S. obligations is exempt. At 60 or older, up to $12,500 a person of pensions and eligible retirement income, which includes interest, is excluded. Bank interest can be tax-free inside that limit. The calculator includes this. 30 Del. C. 1106; Delaware 2025 PIT-RES instructions
District of Columbia	No rule found (treated as taxable)	Exempt: Schedule I, Calculation B, line 1.	The District's law exempts interest and dividends on U.S. obligations, but we found no District guidance on fund dividends. The calculator treats them as taxable. Attach a statement showing the exempt amount and who paid it. D.C. Code 47-1803.02; District of Columbia 2025 D-40 booklet
Florida	No tax on interest	No state income tax on interest.	No state income tax on interest.
Georgia	Share of the fund's income	Exempt: Form 500, Schedule 1, line 10.	Dividends from funds that earn interest on direct U.S. obligations are exempt to that extent. At 62 to 64 up to $35,000, and at 65 or older up to $65,000, of retirement income a person is excluded, and interest counts as retirement income. Bank interest can be tax-free inside that limit. The calculator includes this. Interest from repurchase agreements, Fannie Mae, Ginnie Mae and Freddie Mac is taxable. Georgia Department of Revenue FAQ; Georgia 2025 IT-511 booklet; Georgia retirement income exclusion
Hawaii	No rule found (treated as taxable)	Exempt: Form N-11, Hawaii Subtractions Worksheet, line a.	Hawaii's guidance covers obligations you own directly; we found none on funds. The calculator treats fund dividends as taxable. Haw. Rev. Stat. 235-7; Hawaii Form N-11 instructions
Idaho	Share of the fund's income	Exempt: Form 39R, Part B, line 3.	The portion of a fund's interest attributable to direct U.S. obligations is exempt; the fund must identify it. Gains on selling U.S. obligations are taxable. Idaho Form 39R instructions
Illinois	Share of the fund's income	Exempt: Schedule M, line 22.	The part of a fund's distribution attributable to U.S. obligations, as the fund determines it, is exempt. You lose the exemption allowance if federal AGI is over $250,000 ($500,000 joint). Treasury interest counts toward federal AGI. The calculator includes this. Repurchase agreements and Fannie Mae, Ginnie Mae and Freddie Mac securities are not exempt. Illinois Schedule M instructions; Illinois Publication 101
Indiana	Share of the fund's income	Exempt: Schedule 2, line 4.	The proportionate share of a fund's dividends from direct U.S. obligations is exempt. Earnings from repurchase agreements do not count. County income tax is figured on Indiana taxable income, so it follows the state exemption. The calculator does not add county tax. Indiana Information Bulletin #19
Iowa	Share of the fund's income	Exempt: Schedule 1, lines 1 and 2, column B.	The portion of a fund's net dividends attributable to direct federal securities is exempt; you need the fund's statement of the percentage. Repurchase agreements and securities merely guaranteed by the government are taxable. School district and EMS surtaxes are a percentage of Iowa tax, so they follow the exemption. The calculator does not add them. Iowa Schedule 1 instructions; Iowa Admin. Code 701-302.52
Kansas	Share of the fund's income	Exempt: Schedule S, line A12.	Only the portion of a fund's distribution attributable to exempt federal obligations is exempt. Some Kansas counties, cities and townships levy a local intangibles tax that taxes bank interest but not interest from the federal government. The calculator does not add it. Kansas 2025 individual income tax booklet; Kansas Form 200, local intangibles tax
Kentucky	No rule found (treated as taxable)	Exempt: Schedule M, line 8.	Kentucky's law, regulation and forms cover interest on U.S. obligations but say nothing about fund dividends. The calculator treats them as taxable. 103 KAR 1:130
Louisiana	Share of the fund's income	Exempt: Schedule E, code 01E.	Amounts a fund identifies as income from U.S. government obligations are exempt; if the fund does not identify the amount, it is taxable. Louisiana 2025 IT-540 instructions
Maine	Share of the fund's income	Exempt: Schedule 1S, line 1.	A fund can pass the exempt character of U.S. obligation interest through to shareholders. Fund income from repurchase agreements does not keep the exempt character. Maine Revenue Services: Government bonds
Maryland	Share of the fund's income	Exempt: Form 502SU, code ab.	The part of a fund's dividends attributable to U.S. obligation interest is exempt, even if the fund earned less than half its interest from them. County and Baltimore City income tax (2.25% to 3.30%) is figured on Maryland taxable income, so it follows the exemption. The calculator does not add it. Income from repurchase agreements and Ginnie Mae securities cannot be subtracted. Md. Tax-General 10-207; Maryland Administrative Release 11
Massachusetts	Share of the fund's income	Exempt: Schedule B, line 6a.	The part of a fund's dividends attributable to U.S. obligation interest is exempt if the fund identifies it in a written notice within 60 days after its tax year ends. M.G.L. c. 62, 2
Michigan	Share of the fund's income	Exempt: Schedule 1, line 10.	Investment companies that invest in U.S. obligations can pass the exemption through to shareholders. Twenty-four Michigan cities tax residents' interest; interest on U.S. obligations is exempt, but it is not clear whether fund dividends are. The calculator does not add city tax. People born before 1946 can deduct interest, dividends and gains up to a limit. The calculator does not include this. Michigan 2025 MI-1040 booklet
Minnesota	Share of the fund's income	Exempt: Schedule M1M, line 14.	Multiply ordinary dividends by the percentage of qualifying federal interest your fund reports. Interest from repurchase agreements does not qualify. The subtraction for people 65 or older with low income (Schedule M1R) is not included in the calculator. Minnesota: U.S. government interest
Mississippi	Share of the fund's income	Exempt: Form 80-108, Schedule B.	A fund's dividends are exempt to the extent they represent interest that would be exempt if you held the securities directly. Interest earned on repurchase agreements is taxable. Miss. Admin. Code 35.III.2.04 (archived copy)
Missouri	Share of the fund's income	Exempt: Form MO-A, Part 1, line 8.	The part of a fund's distribution from direct U.S. obligations is exempt; attach the fund's year-end statement. Missouri 2025 MO-1040 instructions; 12 CSR 10-2.155
Montana	Share of the fund's income	Exempt: Form 2, Schedule I, subtractions line 9.	The part of fund dividends from U.S. obligations is exempt. Mont. Code Ann. 15-30-2120
Nebraska	Share of the fund's income	Exempt: Schedule I, line 15.	The percentage of dividends the fund reports as from U.S. obligations is exempt; list the fund on Schedule I, line 16. Neb. Rev. Stat. 77-2716
Nevada	No tax on interest	No state income tax on interest.	No state income tax on interest.
New Hampshire	No tax on interest	No state income tax on interest.	No state income tax on interest. New Hampshire's Interest and Dividends Tax was repealed for tax periods beginning on or after January 1, 2025.
New Jersey	Share of the fund's income	Exempt: reported as tax-exempt interest, line 16b.	Distributions attributable to interest on federal obligations are exempt whether or not the fund is a New Jersey qualified investment fund. At 62 or older, part of the pension exclusion can be used against other income, including interest, under conditions. The calculator includes this. New Jersey GIT-5; New Jersey 2025 NJ-1040 instructions
New Mexico	Share of the fund's income	Exempt: PIT-ADJ, line 9.	Fund dividends identified on the fund's annual statement as from U.S. obligations are exempt. The Social Security exemption and the deduction for people 65 or older depend on federal AGI, which includes Treasury interest. The calculator includes this. New Mexico 2025 PIT-ADJ instructions
New York	Only if the fund met the 50% test	Exempt: Form IT-201, line 28.	Only if the fund held at least 50% of its assets in U.S. obligations at the end of each quarter of its tax year (repurchase agreements do not count toward the 50%); then the share the fund reports is exempt. Otherwise all of it is taxable. New York City and Yonkers tax follow the state exemption. The calculator can add either. Gains on selling Treasury bills before maturity are taxable. New York 2025 IT-201 instructions; TSB-M-86(7)I; TSB-M-88(5)I
North Carolina	Share of the fund's income	Exempt: Form D-400, Schedule S, line 18.	Only distributions the fund reports as interest on direct U.S. obligations are exempt; you cannot use the percentage of the fund's holdings. 17 NCAC 06B .4103
North Dakota	Share of the fund's income	Exempt: Form ND-1, line 5.	The part of a fund's distribution from U.S. obligations is exempt if the fund is a qualified investment fund. North Dakota law defines a qualified investment fund as one that files a schedule of its holdings with the Tax Commissioner. We could not confirm which funds do; the calculator assumes they qualify. N.D. Cent. Code 57-38
Ohio	Share of the fund's income	Exempt: Schedule of Adjustments, line 26.	The amount or percentage a fund reports as from U.S. obligations is exempt. City income taxes generally do not tax interest. A school district tax on the traditional base follows the state exemption; the calculator does not add it. Ohio Rev. Code 5747.01; Ohio Information Release IT 1992-01
Oklahoma	Share of the fund's income	Exempt: Schedule 511-A, line 1.	The percentage of a fund's income from exempt U.S. obligations is exempt; keep the fund's documentation. Oklahoma Form 511 packet
Oregon	Share of the fund's income	Exempt: Schedule OR-ASC, subtraction code 315.	State exempt-interest dividends are exempt if the fund designates them in a written notice within 60 days after its tax year ends. The federal tax subtraction and the exemption credit phase out on federal AGI, which includes Treasury interest. The calculator includes this. Metro and Multnomah County taxes are figured on Oregon taxable income, so they follow the exemption. The calculator does not add them. Oregon Publication OR-17 (2025)
Pennsylvania	Share of the fund's income	Exempt: PA-40 Schedule A, line 7.	Fund dividends from direct U.S. obligations are exempt, using the Pennsylvania percentage the fund reports. It can differ from the U.S. government share the calculator uses. Philadelphia's School Income Tax does not tax bank interest, but it taxes money fund dividends except the part from U.S. obligations. The calculator does not add it. Pennsylvania's Tax Forgiveness counts Treasury interest as income. The calculator includes this. Pennsylvania 2025 PA-40 instructions
Rhode Island	Share of the fund's income	Exempt: Schedule M, line 1a.	Rhode Island's rulings for specific funds exempt the part of distributions from U.S. obligations. The Social Security and pension modifications end above set federal AGI levels, and Treasury interest counts toward federal AGI. The calculator includes this. R.I. Gen. Laws 44-30-12; Rhode Island ruling 96-01
South Carolina	Share of the fund's income	Exempt: SC1040, line m.	The part of a fund's dividends from exempt obligations is exempt; the fund does not need to hold 50% of them. At 65 or older, a deduction of up to $15,000 a person can be used against any income, including bank interest. The calculator includes this. From 2026, the new South Carolina deduction phases out on federal AGI, which includes Treasury interest. The calculator includes this. South Carolina Revenue Ruling 16-2; South Carolina 2025 SC1040 instructions
South Dakota	No tax on interest	No state income tax on interest.	No state income tax on interest.
Tennessee	No tax on interest	No state income tax on interest.	No state income tax on interest. Tennessee's Hall income tax on interest and dividends was repealed for tax periods beginning on or after January 1, 2021.
Texas	No tax on interest	No state income tax on interest.	No state income tax on interest.
Utah	Share of the fund's income	Exempt: TC-40A, Part 2, code 71.	The percent of fund income from U.S. obligations, as the fund's statement shows it, is exempt. The retirement credit and the child credit phase out on a modified AGI that includes Treasury interest. The calculator does not include those credits. Utah Code 59-10-114; Utah Publication 33
Vermont	Share of the fund's income	Exempt: Schedule IN-112, Part I, line 7.	Interest from U.S. obligations held through a fund is exempt to the extent it comes from interest the fund received. The Social Security exclusion and the minimum-tax trigger use federal AGI, which includes Treasury interest. The calculator includes this. Vermont Technical Bulletin 24
Virginia	Share of the fund's income	Exempt: Schedule ADJ, line 4.	Fund income is presumed taxable unless the exempt part is substantiated for each distribution; the department generally expects a monthly breakdown from the fund. The age deduction (up to $12,000 a person at 65 or older) shrinks dollar for dollar above $50,000 ($75,000 joint) of adjusted federal AGI, which includes Treasury interest. The calculator includes this. 23VAC10-110-142; Virginia ruling P.D. 94-281
Washington	No tax on interest	No state income tax on interest.	No state income tax on interest. Washington's capital gains excise tax applies to sales of long-term capital assets, not to interest.
West Virginia	Share of the fund's income	Exempt: Schedule M, line 29.	Federal interest dividends paid by a regulated investment company are exempt. The $8,000 senior deduction is reduced by the Treasury interest you subtract, so at 65 or older bank interest and Treasury interest can end up taxed alike. The calculator includes this. W. Va. Code 11-21-12; West Virginia 2025 IT-140 instructions
Wisconsin	Share of the fund's income	Exempt: Schedule SB, line 2.	Interest from direct U.S. obligations keeps its exempt character when it passes through a fund. Wisconsin Schedule SB instructions; Wisconsin Tax Bulletin 80
Wyoming	No tax on interest	No state income tax on interest.	No state income tax on interest.

Test cases

Each case was computed independently by a reference implementation and by this page's code; the two must agree before publication. The self-test reruns that comparison in your browser: 51 states and DC, four households each, plus special cases.

Run the self-test

Sources

• 31 U.S.C. 3124, exemption from state and local taxation.
• U.S. Securities and Exchange Commission, Form N-1A, Item 26 (yield calculations).
• U.S. Department of the Treasury, Daily Treasury Bill Rates.
• Internal Revenue Service, Net Investment Income Tax.
• Fund sponsors' 2025 U.S. government income documents and yield pages, linked in the fund table.
• State sources are linked in the state table.

Corrections

If a rule or a figure is wrong, tell us. We fix it, update the checked date, and note the change here.

Dollars Ahead is not affiliated with any fund company, bank or brokerage named here and earns nothing from this page. This tool shows what published tax rules do to the numbers you enter. It is not investment, tax or legal advice. Bank deposits are insured by the FDIC up to its limits if the bank fails; brokerage cash gets that coverage only through the banks it is swept to, and only under conditions. Money market funds and ETFs are not deposits, are not FDIC-insured and can lose value.