Updated October 27, 2026 from live rates

Where to keep cash in California

California’s top income tax rate is 13.30%. At that rate and 37% federal, a 1-year Treasury bill at 4.50% keeps the most: about $7,088 a year on $250,000 after tax, versus $12 in a default brokerage sweep. A CD or savings account would need to pay 5.70% to keep as much as a 1-year Treasury bill at 4.50%.

Option

Rate

Kept a year on $250,000

1-year Treasury bill

4.50%

$7,088

3-month Treasury bill

4.22%

$6,647

Treasury-only money fund

3.79%

$5,969

CFG Bank 1-year CD

4.65%

$5,778

Marcus by Goldman Sachs 11-month No-Penalty CD

4.00%

$4,970

Wealthfront Cash Account

3.55%

$4,411

Schwab California Municipal Money Fund

1.71%

$4,275

Municipal money fund (not your state's)

1.45%

$3,143

Merrill Edge

0.01%

$12

Why Treasuries win in California

Savings accounts, CDs and most money funds pay interest that California taxes at up to 13.30%. Treasury bills don’t. So a Treasury bill paying 4.50% keeps what a fully taxable account paying 5.70% would, for a top-bracket California resident. Today the best 1-year CD we track pays 4.65% and the best savings account 3.55%.

California municipal money funds

These hold California municipal debt, so their income is generally free of both federal and California income tax (and the 3.8% surtax). Their yields are lower, so they win only at high brackets. For a top-bracket resident, one needs to yield at least 2.83% to beat a 1-year Treasury bill.

Schwab California Municipal Money Fund (SWKXX): 1.71% 7-day yield on October 26, 2026
Fidelity California Municipal Money Market Fund (FABXX): check its current yield on the sponsor’s page
Vanguard California Municipal Money Market Fund (VCTXX): check its current yield on the sponsor’s page

A small share of a state fund’s income can come from out-of-state or taxable sources; its yearly tax notice says how much.

California taxes on cash, in brief

Top income tax rate: 13.30%. Your own rate may be lower; change it above.
Interest on U.S. Treasury bills, notes and bonds: exempt from state and local income tax, taxed federally.
Savings accounts, CDs and prime or government money funds: taxed by California, except the share of a fund’s income that comes from U.S. Treasuries.
California lets you exclude a fund’s Treasury income only if the fund holds at least 50% U.S. government securities. Treasury-only funds qualify; many government funds don’t.

Questions

Is Treasury bill interest taxed in California?

No. Interest on U.S. Treasury bills, notes and bonds is exempt from state and local income tax under federal law, so California doesn’t tax it. It is still subject to federal income tax. Interest from savings accounts and CDs is taxed by California at up to 13.30%.

Where should I keep cash in California?

At California’s top rate and 37% federal, a 1-year Treasury bill keeps the most after tax today (4.50%). The answer depends on your brackets; the calculator on this page updates for yours.

What rate does a CD need to beat Treasury bills in California?

At California’s top rate and 37% federal, a CD or savings account needs at least 5.70% to keep as much as a 1-year Treasury bill paying 4.50%.

Is a California municipal money fund worth it?

Income from a California municipal money fund is generally free of federal and California income tax. To beat a 1-year Treasury bill at 4.50% for a top-bracket California resident, it needs to yield at least 2.83%. SWKXX yielded 1.71% (7-day yield, October 26, 2026).

Rates: each provider’s own page and the U.S. Treasury, October 27, 2026. State rates: Tax Foundation, 2026 (top single-filer rate; local taxes not included). General information, not tax advice. Other states →