Tax Playbook · Investment tax wins
Stash cash in T-bills, not a money market fund
When a money market fund pays you, every dollar shows up on that year's tax return. A T-bill works differently: you buy it cheap, get the full price back later, and the IRS only taxes that profit when the bill matures or you sell it — not year by year. And your state never taxes it at all. On $50,000 earning 4.5%, a Californian keeps about $300 a year in state tax that a money market fund would have paid. The catch: T-bills tie up your cash until maturity, and the state-tax win is worth nothing in a no-income-tax state or inside an IRA.
Good for: For cash savers in high-tax states who can leave the money alone for a few months.
Learn the basics
Recent articles & guides
- Investormint: T-Bills vs. Money Market Funds in 2026 — After-Tax Yield
- The Finance Buff: Which Schwab Money Market Fund Is the Best at Your Tax Rates
- Winchell House: How Are Treasury Bills Taxed? (2026)
- Investopedia: Taxation of Treasury Bills — What You Need to Know
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Educational summary, not tax advice. Limits and rules change — confirm current law with your tax adviser.