If you are planning to buy some short-term CDs soon, don’t forget to consider short-term Treasurys. Depending on your taxable income and state of residence, their tax-equivalent yields may surprise you. As an example, let’s use the 6-month T-bill. From the Daily Treasury Par Yield Curve Rates (https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treas...), the 6-month T-bill had a yield of 4.81% as of 1/5/2023. According to the Taxable-Equivalent Yield Calculator available at Fidelity, if your principle state of residence is California, and your estimated taxable income is $59,000, and your federal tax filing status is single, the 6-month T-bill at 4.81% has a tax-equivalent yield of a 6-month CD at 5.54%. Changing the estimated taxable income to $118,000 and the federal tax filing status to married filing jointly produces the same tax-equivalent yield of a 5.54%. If you change the state to New York and leave all the other variables the same, the 6-month T-bill at 4.81% has a tax-equivalent yield of a 6-month CD at 5.28%. Repeating this procedure for Nebraska generates a result of 5.34%. For Missouri the result is 5.23%.
All of these results neglect local income tax, and assume that the Treasury Bill and the comparable CD are held in a taxable deposit account. The Taxable-Equivalent Yield Calculator available at Fidelity (https://digital.fidelity.com/prgw/digital/taxyieldcalc/) expresses yield as the effective annual rate of return in percent.