Updated October 27, 2026 from live rates
Where to keep cash in District of Columbia
District of Columbia’s top income tax rate is 10.75%. 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 $13 in a default brokerage sweep. A CD or savings account would need to pay 5.43% to keep as much as a 1-year Treasury bill at 4.50%.
Why Treasuries win in District of Columbia
Savings accounts, CDs and most money funds pay interest that District of Columbia taxes at up to 10.75%. Treasury bills don’t. So a Treasury bill paying 4.50% keeps what a fully taxable account paying 5.43% would, for a top-bracket District of Columbia resident. Today the best 1-year CD we track pays 4.65% and the best savings account 3.55%.
Municipal money funds in District of Columbia
We don’t list a money fund that holds only District of Columbia municipal debt. A national municipal fund is free of federal tax but generally taxed by District of Columbia; for a top-bracket resident it needs at least 3.18% to beat a 1-year Treasury bill.
District of Columbia taxes on cash, in brief
- Top income tax rate: 10.75%. 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 District of Columbia, except the share of a fund’s income that comes from U.S. Treasuries.
Questions
Is Treasury bill interest taxed in District of Columbia?
No. Interest on U.S. Treasury bills, notes and bonds is exempt from state and local income tax under federal law, so District of Columbia doesn’t tax it. It is still subject to federal income tax. Interest from savings accounts and CDs is taxed by District of Columbia at up to 10.75%.
Where should I keep cash in District of Columbia?
At District of Columbia’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 District of Columbia?
At District of Columbia’s top rate and 37% federal, a CD or savings account needs at least 5.43% to keep as much as a 1-year Treasury bill paying 4.50%.
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 →