Updated October 27, 2026 from live rates

Where to keep cash in Illinois

Illinois’ top income tax rate is 4.95% (a flat rate). 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 $15 in a default brokerage sweep. A CD or savings account would need to pay 4.88% 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

CFG Bank 1-year CD

4.65%

$6,748

3-month Treasury bill

4.22%

$6,647

Treasury-only money fund

3.79%

$5,969

Marcus by Goldman Sachs 11-month No-Penalty CD

4.00%

$5,805

Wealthfront Cash Account

3.55%

$5,152

Municipal money fund (not your state's)

1.45%

$3,446

Merrill Edge

0.01%

$15

Why Treasuries win in Illinois

Savings accounts, CDs and most money funds pay interest that Illinois taxes at up to 4.95%. Treasury bills don’t. So a Treasury bill paying 4.50% keeps what a fully taxable account paying 4.88% would, for a top-bracket Illinois resident. Today the best 1-year CD we track pays 4.65% and the best savings account 3.55%.

Municipal money funds in Illinois

We don’t list a money fund that holds only Illinois municipal debt. A national municipal fund is free of federal tax but generally taxed by Illinois; for a top-bracket resident it needs at least 2.98% to beat a 1-year Treasury bill.

Illinois taxes on cash, in brief

Top income tax rate: 4.95%, a flat rate on all income. 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 Illinois, except the share of a fund’s income that comes from U.S. Treasuries.

Questions

Is Treasury bill interest taxed in Illinois?

No. Interest on U.S. Treasury bills, notes and bonds is exempt from state and local income tax under federal law, so Illinois doesn’t tax it. It is still subject to federal income tax. Interest from savings accounts and CDs is taxed by Illinois at up to 4.95%.

Where should I keep cash in Illinois?

At Illinois’ 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 Illinois?

At Illinois’ top rate and 37% federal, a CD or savings account needs at least 4.88% 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 →