Institutional Financial Workbench & Quantitative Models
Deterministic financial models, scenario simulators, and after-tax yield comparators. Engineered with verified Tier-1 market feeds (FRED, U.S. Treasury, Alpaca), zero synthetic numbers, and institutional mathematical proofs for wealth managers, students, and corporate treasurers.
Tax-Equivalent Yield (TEY) & Fixed Income Cash Comparator
U.S. Treasury bills, notes, and Treasury bond ETFs ($SGOV) are 100% exempt from state and local income taxes (SALT), whereas commercial bank CDs, corporate bonds, and general money market funds are fully taxable. Select your state and tax bracket to calculate exact after-tax take-home cash yields and required taxable breakeven yields.
Because U.S. Treasuries are exempt from California income tax, a Treasury earning 3.76% provides an after-tax take-home return equivalent to a 5.42% taxable bank CD. On a $250,000 allocation, holding Treasuries shields approximately $1,250 per year directly from state taxes.
Tax-Equivalent Yield (TEY) Calculator & Cash Comparator
This institutional model calculates the exact after-tax take-home return of U.S. Treasury bills, notes, and Treasury ETFs ($SGOV) versus commercial bank CDs and corporate bonds across federal and 50-state tax brackets under 31 U.S.C. § 3124.
Target Audience Application
Evaluate whether sweeping idle corporate cash into commercial checking CDs or state-tax-exempt short-term Treasuries delivers higher net cash yields after state corporate franchise taxes.
Demonstrate tax drag to clients in high-tax jurisdictions (California, New York, New Jersey, Oregon, Minnesota) when comparing Treasury yields to taxable bank certificates of deposit.
Examine retail and institutional cash substitution effects across the short-end of the yield curve during shifts in monetary policy.
Avoid the retail trap of chasing high nominal bank CD promotional rates that end up yielding less after state and federal income taxes than liquid Treasury bills.
Tax-Equivalent Yield & Net Take-Home Formulas
TEY = Treasury Nominal Yield / (1 - Marginal State Tax Rate)2. Net After-Tax Take-Home Yields:
Net Treasury Yield = Treasury Yield × (1 - Federal Tax Rate)Net Taxable Yield = Taxable CD Yield × [1 - (Federal Tax Rate + State Tax Rate)]
Statutory Authority & Critical Thresholds
Under 31 U.S.C. § 3124, obligations of the United States Government (including Treasury bills, notes, bonds, and Treasury-only ETFs like $SGOV) are immune from taxation by State and municipal authorities.
- State Income Tax Exemption: 100% exempt from all state and local taxes across all 50 states and D.C.
- Federal Tax Liability: Treasury interest remains subject to ordinary Federal income taxation.
- Decision Rule: If a commercial bank CD pays less than the calculated TEY, you earn higher after-tax cash by purchasing U.S. Treasuries.
Institutional Methodology & Underwriting Dossier
This institutional model calculates the exact after-tax take-home return of U.S. Treasury bills, notes, and Treasury ETFs ($SGOV) versus commercial bank CDs and corporate bonds across federal and 50-state tax brackets under 31 U.S.C. § 3124.
1. Target Audience & Practical Application
How different financial market participants apply this quantitative model to real-world capital allocation:
Evaluate whether sweeping idle corporate cash into commercial checking CDs or state-tax-exempt short-term Treasuries delivers higher net cash yields after state corporate franchise taxes.
Demonstrate tax drag to clients in high-tax jurisdictions (California, New York, New Jersey, Oregon, Minnesota) when comparing Treasury yields to taxable bank certificates of deposit.
Examine retail and institutional cash substitution effects across the short-end of the yield curve during shifts in monetary policy.
Avoid the retail trap of chasing high nominal bank CD promotional rates that end up yielding less after state and federal income taxes than liquid Treasury bills.
2. Tax-Equivalent Yield & Net Take-Home Formulas
TEY = Treasury Nominal Yield / (1 - Marginal State Tax Rate)2. Net After-Tax Take-Home Yields:
Net Treasury Yield = Treasury Yield × (1 - Federal Tax Rate)Net Taxable Yield = Taxable CD Yield × [1 - (Federal Tax Rate + State Tax Rate)]
3. Statutory Authority & Critical Thresholds
Under 31 U.S.C. § 3124, obligations of the United States Government (including Treasury bills, notes, bonds, and Treasury-only ETFs like $SGOV) are immune from taxation by State and municipal authorities.
- State Income Tax Exemption: 100% exempt from all state and local taxes across all 50 states and D.C.
- Federal Tax Liability: Treasury interest remains subject to ordinary Federal income taxation.
- Decision Rule: If a commercial bank CD pays less than the calculated TEY, you earn higher after-tax cash by purchasing U.S. Treasuries.