Ask Terry Questions Net interest after taxes

Net interest after taxes

By Terry Savage on March 08, 2023 | Chicken Money

stuffing my mattress with idle cash until dabbling in stocks again does nothing. Let’s say I buy $10,000 in Treasury bills and using the current 4-5% interest then cashing out after maturity (I’m in a 12% federal tax bracket) what will my net gain be?

Terry Says

Just as with bank CDs, the interest you earn is taxable at your marginal tax bracket rate. BUT, unlike bank CDs, you do NOT pay state income taxes on your T-bill interest. And remember, you are getting the roughly 5% for only 6 months.
So 5% interest on $10,000 for 6 months works out to about $250. You’ll add that amount to your income and pay taxes on it.



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