Update on T-bill rates

It’s been a while since I updated my T-bill APR chart. Here it is with the latest data from the official Treasury Direct auction results page:

This week’s T-bill APYs came in at the following:

1. 28-day: 5.10%
2. 91-day: 5.21%
3. 182-day: 5.21%

Interest from T-bills are exempt from state taxes. As mentioned in an earlier post, I originally thought I’d be taking the standard deduction on my taxes, but I found out later that given California’s 9.3% state income tax rate, it would probably make more sense for us to itemize our deduction and include the taxes we paid to California.

It turns out that the calculations for finding tax-equivalent yields differs depending on whether you itemize or not. For those who itemize, the tax-equivalent yield simply includes the difference that you would have to pay in state taxes:

Using the equation above, the tax-equivalent yields for this week’s T-bills based on California’s state income tax rate would be:

1. 28-day: 5.62%
2. 91-day: 5.74%
3. 182-day: 5.74%

If you take the standard deduction, the calculation would be slightly more involved and would take your federal tax bracket into account as well. The tax-equivalent yields would also be higher.

Compared to current yields on various short-term CDs, savings accounts, and money market funds, T-bill yields still come in much higher, making them still attractive investments, in my opinion.

It’s nice to know that even though I slightly miscalculated my yields, it didn’t cause me to make a bad investment decision!

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