Updated October 27, 2026 from live rates
Where to keep cash in New Jersey
New Jersey’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 New Jersey
Savings accounts, CDs and most money funds pay interest that New Jersey 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 New Jersey resident. Today the best 1-year CD we track pays 4.65% and the best savings account 3.55%.
New Jersey municipal money funds
These hold New Jersey municipal debt, so their income is generally free of both federal and New Jersey 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.
- Fidelity New Jersey Municipal Money Market Fund (FAYXX): 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.
New Jersey 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 New Jersey, except the share of a fund’s income that comes from U.S. Treasuries.
Questions
Is Treasury bill interest taxed in New Jersey?
No. Interest on U.S. Treasury bills, notes and bonds is exempt from state and local income tax under federal law, so New Jersey doesn’t tax it. It is still subject to federal income tax. Interest from savings accounts and CDs is taxed by New Jersey at up to 10.75%.
Where should I keep cash in New Jersey?
At New Jersey’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 New Jersey?
At New Jersey’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%.
Is a New Jersey municipal money fund worth it?
Income from a New Jersey municipal money fund is generally free of federal and New Jersey income tax. To beat a 1-year Treasury bill at 4.50% for a top-bracket New Jersey resident, it needs to yield at least 2.83%.
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 →