Top HYSAs
4.40%
T-Bills vs HYSA (2026) - State Tax Decides Most Cases
TL;DR: Top HYSAs pay 4.20-4.50% with instant liquidity and FDIC. T-bills pay 4.05-4.30% and are state-tax exempt. For high-tax-state residents over $25K, T-bills usually win on after-tax yield. For sub-$25K, no-tax-state residents, or anyone valuing instant ATM access, the HYSA wins.
The headline gap is small - the tax gap isn't
Right now you can get 4.40-4.50% on a top high-yield savings account (Marcus, Discover, Wealthfront, Ally) and 4.05-4.30% on a 4-26 week T-bill. The HYSA wins by 10-45 basis points on headline. Apply state and local tax, and for residents of any state with income tax above ~6%, the T-bill catches up or passes the HYSA on after-tax basis.
Current yields - 2026-06-27
4-week T-bill
4.30%
13-week T-bill
4.25%
26-week T-bill
4.15%
52-week T-bill
4.05%
Side by side
| Dimension | HYSA | T-Bills |
|---|---|---|
| Current yield (2026) | 4.20-4.50% APY | 4.05-4.30% |
| Federal tax | Taxable as ordinary income | Taxable as ordinary income |
| State tax | Fully taxable | Exempt (31 USC 3124) |
| Default protection | FDIC to $250K per depositor | U.S. Treasury - unlimited |
| Liquidity | Same day (ACH usually next-day) | T+1 settlement on secondary market |
| Rate stability | Variable - bank can change anytime | Fixed for term once purchased |
| Minimum balance | Usually $0 | $100 |
| Withdrawal limits | Regulation D (now suspended) - generally none | None (sell to redeem) |
| Best for | Sub-$25K, instant-access, no-tax states | Six-figure cash, high-tax states |
When the HYSA wins
- You live in a no-state-tax state. No exemption to capture, take the higher headline yield.
- Balance under $25K. Even at California 10.3% state tax, the savings on $25K at 4.15% is $107/year. Not nothing, but if HYSA simplicity matters more, it's a tie.
- Instant ATM access matters. HYSAs allow same-day ACH; brokerage settlement on T-bill sales is T+1.
- You want one account that does cash management AND savings. HYSAs often link to bill pay, debit cards, and ACH. T-bills sit inside a brokerage that's not optimized for transactional banking.
- You're disciplined about rate-shopping. HYSAs reprice constantly. If you actively chase the top 3-month rate, you can stay ahead of T-bills by 30-50 bps.
When the T-bill wins
- You live in California, New York, New Jersey, Oregon, Hawaii, Minnesota, or any state with income tax above 6%. The state-tax exemption is worth 30-70 bps on after-tax yield.
- Balance over $100K. FDIC caps at $250K per depositor per bank - if you have $500K, you need 2 banks. T-bills have unlimited backing in one account.
- You want rate certainty for 4-52 weeks. HYSA rates float. Buy a 52-week T-bill at 4.05% and you own that yield for a year - the HYSA might be at 3.50% in six months if the Fed cuts.
- You hold business or trust cash. FDIC limits still apply per ownership category; Treasury direct ownership simplifies above-cap holdings.
- You expect Fed rate cuts. Locking 52-week paper at 4.05% protects you from a HYSA drop to 3.5% later in 2026.
Worked example - $100,000 emergency fund over 1 year
California resident, top federal + 10.3% state
HYSA at 4.45% (assume flat). Pre-tax: $4,450. Federal: $1,647. State: $458. After-tax: $2,345.
52-week T-bill at 4.05%. Pre-tax: $4,050. Federal: $1,499. State $0. After-tax: $2,551.
T-bill wins by $206 - the state-tax exemption flips a 40-bp headline gap into a $206/year edge.
Florida resident, top federal, no state tax
HYSA at 4.45%. After-tax: $2,804.
52-week T-bill at 4.05%. After-tax: $2,552.
HYSA wins by $252. No state-tax leverage. Take the higher yield.
Texas resident with $500K cash
HYSA strategy: Split across two banks (Marcus + Discover) at 4.45% blended. After federal tax: $14,018.
T-bill strategy: 52-week T-bills at 4.05%. After federal tax: $12,758.
HYSA wins by $1,260 - and the 2-bank split is FDIC-covered. T-bill strategy wins on simplicity (one account, no FDIC management) but loses on after-tax dollars in no-state-tax states.
The MYGA contrast (for cash you'll leave longer)
If you're parking emergency cash, both HYSAs and T-bills are appropriate. If you're parking "future" cash you can confidently leave for 3-10 years, neither one is. A 3-year MYGA at 5.30% pays 80-120 basis points more than either of these instruments, and the interest is tax-deferred. The trade-off is liquidity - MYGAs allow 10%/yr free withdrawal beyond which surrender charges apply. For the right money, that lockup is the price you pay for a meaningful yield premium and tax deferral.
FAQ
Why don't more savers use T-bills instead of HYSAs?
Three reasons: (1) friction - opening a brokerage or TreasuryDirect account is more work than opening a savings account; (2) habit - savings accounts are familiar; (3) state-tax exemption is invisible until you compute after-tax yield. None of these reasons mean the HYSA is the better choice for high-balance, high-tax-state savers.
Can I have both?
Yes, and most high-net-worth households do. Use a HYSA for $25K-$50K of immediate-access emergency cash. Park additional cash (above the FDIC cap or above the access need) in T-bills.
How does Treasury MMF (SGOV, BIL, USFR) compare?
Treasury ETFs hold T-bill portfolios at a small expense ratio (3-15 bps). They give you intraday liquidity, automatic reinvestment, and capture the T-bill yield minus the fee. Most of their dividends are state-tax exempt (often 95-100%). For most savers, a Treasury ETF is functionally identical to a T-bill ladder with less friction.
Do all HYSAs offer the same FDIC coverage?
Yes - FDIC is a federal program, identical at every member bank: $250K per depositor per bank per ownership category. The bank's marketing about 'enhanced' coverage is usually about ownership-category structuring, not extra protection.
Are HYSAs taxed differently than checking?
No - identical. Interest is taxable federally and at the state level as ordinary income, reported on 1099-INT.
Can a HYSA cut my rate without notice?
Yes. HYSA rates are 'variable' by definition. Banks reprice often, sometimes monthly. A 'promotional' HYSA rate can drop 50-100 bps within months of opening. T-bills, once purchased, are fixed for the term.
Should I rate-shop HYSAs aggressively?
It earns money but takes time. Switching between Marcus, Wealthfront, and SoFi quarterly to catch the top rate adds 15-30 bps of annual yield. If your balance is $100K+, that's $150-$300 - worth a small effort. If it's $10K, it isn't.
Are T-bills riskier than HYSAs?
No. T-bills are the safest dollar-denominated debt instrument on earth - the U.S. Treasury directly. HYSAs are bank deposits, FDIC-insured to $250K. Both are essentially default-free at typical retail balances. Above $250K per bank, T-bills win unambiguously.
Related reading
- T-bills explained
- T-bills vs CDs
- State tax on Treasury interest
- CD reviews and HYSA comparisons
- MYGA rates 2026 - higher-yield alternative
HYSAs and T-bills are both fine for emergency cash. Neither is right for 3-10 year money.
Hans Goldstein, independent licensed insurance producer.
For the cash above your emergency reserve - money you can confidently leave alone for 3-10 years - MYGAs pay 100+ basis points more than either HYSAs or T-bills, tax-deferred. Worth seeing the after-tax math on the portion of your cash that doesn't need weekly liquidity.
Drop your info and within 24 hours you'll get a written side-by-side: the Treasury option vs. the top 3 MYGAs from A-rated carriers at the same term, end-of-term math at your actual dollar amount, and after-tax yield computed at your state bracket. No pitch, no follow-up calls unless you ask.
Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple A-rated carriers
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Disclosure
This review reflects publicly available Treasury auction results, TreasuryDirect documentation, and approximate market yields as of the date stated above. Treasury yields change daily; current yields differ from prior auctions and may differ from those shown here. This article is general information for educational purposes; it is not a personalized recommendation, solicitation, or offer of any specific security or insurance product. U.S. Treasury securities are backed by the full faith and credit of the United States Government. MYGA references compare Treasury yields against approximate rates from A-rated insurance carriers as of the date stated; carrier rates change monthly. State guaranty fund coverage on annuities is provided by the state insurance department and varies by state (typically $250,000-$300,000 per owner per carrier). Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated annuity carriers; he is NOT a registered investment advisor, broker-dealer, or registered representative, and is not paid by the U.S. Treasury, TreasuryDirect, or any brokerage for this review. No compensation has been received from any third party in connection with this content. Always read the actual offering documents and consult a licensed advisor before purchasing any security or annuity. Tax discussion of 31 U.S.C. §3124 and Internal Revenue Code provisions reflects law as of 2026 and is subject to change.