T-bills vs high-yield savings in California: the state tax decides it.

Treasury bill interest is exempt from California income tax; savings interest is not. In the 9.3% bracket, the best plain savings rate we track (4.40%, Pibank) keeps 3.99% after state tax, while a 26 week T-bill at 4.32% keeps all of it. That is $33 a year more per $10,000, and a savings account would need about 4.76% to match.

BY CALIFORNIA TAX BRACKET

Compared with a 4.32% 26 week bill and 4.40% savings. The higher your bracket, the bigger the bill’s edge.

CA bracket · taxable income	Savings keeps	Savings rate to tie	Bill edge / yr on $10,000	Bill edge / yr on $50,000
4%single $26,264–$41,452; joint $52,528–$82,904	4.22%	4.50%	+$10	+$48
6%single $41,452–$57,542; joint $82,904–$115,084	4.14%	4.60%	+$18	+$92
8%single $57,542–$72,724; joint $115,084–$145,448	4.05%	4.70%	+$27	+$136
9.3%single $72,724–$371,479; joint $145,448–$742,958	3.99%	4.76%	+$33	+$165
10.3%single $371,479–$445,771; joint $742,958–$891,542	3.95%	4.82%	+$37	+$187
11.3%single $445,771–$742,953; joint $891,542–$1,485,906	3.90%	4.87%	+$42	+$209
12.3%single over $742,953; joint over $1,485,906	3.86%	4.93%	+$46	+$231

Brackets are from the FTB’s 2025 rate schedules (PDF). Your bracket is the rate on your last dollar of California taxable income, not your average rate. Below about $26k single / $52k joint (1–2% brackets) the difference is a few dollars.

WHICH BILL

Every bill term beats 3.99% right now; longer terms pay a little more but lock the cash longer.

Bill term	Yield	vs savings after 9.3% CA tax
4 weeks	4.01%	0.02%
6 weeks	4.01%	0.02%
8 weeks	4.09%	0.10%
13 weeks	4.14%	0.15%
17 weeks	4.23%	0.24%
26 weeks	4.32%	0.33%
52 weeks	4.41%	0.42%

Yields are Treasury’s coupon-equivalent rates for Oct 23, 2026 (source). Savings rates are APYs, which already include compounding; a bill yield does not, so rolling bills over earns slightly more than the yield shown. If anything, this table understates the bill.

THE CATCHES

Bills win on rate, savings wins on access. Split by when you need the money.

Access: savings is same-day. A bill is locked until it matures unless you sell it at a brokerage (at market price); at TreasuryDirect you wait.
Rate moves: a bill locks today’s yield for its term; a savings rate can change any day, in either direction.
Itemizers: state tax you pay on savings interest can be deducted federally if you are under the SALT cap, which shaves a bit off the bill’s edge.
Teaser savings rates: a temporary promo rate can still beat a bill while it lasts. See best no-strings savings for the plain rates and the catches.

Keep your emergency fund in savings; put cash you will not touch for 1–6 months into bills.

SOURCES

T-bill yields: U.S. Treasury daily bill rates (Oct 23, 2026, refreshed daily). Savings rate: our Rates data (checked Oct 25, 2026). California brackets: FTB 2025 rate schedules. Treasury interest is exempt from state income tax under federal law (31 U.S.C. 3124); bank savings interest is taxed by California.

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