How is VMFXX taxed?
VMFXX is taxed federally, with the 3.8% on investment income above $200,000 single or $250,000 joint. States tax only the 33.4% of its income that wasn't from U.S. government obligations in 2025.
Vanguard Federal Money Market Fund
A government money market fund. 66.6% of its income in 2025 came from U.S. government obligations.
It is Vanguard’s settlement fund, where cash in a Vanguard account sits unless you move it.
- Yield
- 3.79%, the 7-day SEC yield for October 1, 2026, after the fund’s expenses
- Federal
- Taxed federally, with the 3.8% on investment income above $200,000 single or $250,000 joint.
- States
- The 9 states with no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming) take nothing. Every state with an income tax taxes the 33.4% that wasn't from U.S. government obligations.
- New York City
- Treats it the way the state does.
- Last year’s share
- 66.6% of its 2025 income was from U.S. government obligations, from Vanguard’s January sheet.
What it is worth after tax
The tax-equivalent yield: what a savings account, taxed by everyone, would have to pay to leave you as much as VMFXX does. Each with $100,000 in cash.
Work out yours with your own income and state.
| Where | Single, $60,000 | Single, $150,000 | Married, $400,000 |
|---|---|---|---|
| Texas | 3.79% | 3.79% | 3.79% |
| California | 3.97% | 4.14% | 4.16% |
| New York | 3.96% | 4.00% | 4.05% |
| New York City | 4.09% | 4.16% | 4.23% |
VMFXX keeps 2.88% in Texas, 2.76% in California, 2.81% in New York and 2.76% in New York City for a single filer earning $150,000 a year.
Where it pays the most today
Of the six Vanguard funds here, after every tax, on the yields for October 1, 2026.
- Single, $60,000
- Nowhere today.
- Single, $150,000
- Nowhere today.
- Married, $400,000
- Nowhere today.
Asked about VMFXX
How is VMFXX taxed?
VMFXX is taxed federally, with the 3.8% on investment income above $200,000 single or $250,000 joint. States tax only the 33.4% of its income that wasn't from U.S. government obligations in 2025.
What is VMFXX's tax-equivalent yield?
It depends on your bracket and your state. On its 3.79% yield for October 1, 2026, for a single filer earning $150,000 a year it is 3.79% in Texas, 4.14% in California, 4.00% in New York and 4.16% in New York City: what a savings account taxed by everyone would have to pay to leave as much.
Is VMFXX the best money market fund?
Not on today's yields for a single filer earning $150,000 a year. Of the six Vanguard funds here, the one that leaves the most after tax is VMSXX, VCTXX or VYFXX, depending on the state. The answer moves with yields and with your bracket.
Does VMFXX meet the 50% test in California, Connecticut and New York?
Yes, for 2025: at least half the fund was U.S. government debt at the end of every quarter, so those states let its U.S. government share through untaxed like every other state does.
The yield is from Vanguard’s page for VMFXX, collected twice a day.
Checked on September 30, 2026 against Net investment income tax, Instructions for Form 8960, Vanguard, U.S. government obligations income information for 2025, ICI, state taxation of dividends from federal obligations (2023), Rev. Proc. 2025-32 and every state's published schedule. An estimate for your records, not tax advice.
Put more back in your pocket.
Four questions find the fund that leaves you the most. Reimburse writes when a different one starts paying you more.