A money market fund or a high-yield savings account?
Savings interest is taxed by everyone. A money market fund can skip your state’s tax or the federal one, so the fair test is what savings would have to pay to leave you the same.
What savings would have to pay
To match the fund that leaves each household the most, on Vanguard’s yields for October 1, 2026, with $100,000 in cash. A savings account paying less keeps less.
Work out yours with your own income and state.
| Where | Single, $60,000 | Single, $150,000 | Married, $400,000 |
|---|---|---|---|
| Texas | 3.80% VMRXX | 4.39% VMSXX | 4.63% VMSXX |
| California | 4.08% VUSXX | 4.59% VCTXX | 4.86% VCTXX |
| New York | 4.05% VUSXX | 4.71% VYFXX | 5.05% VYFXX |
| New York City | 4.24% VUSXX | 4.98% VYFXX | 5.37% VYFXX |
The same money, two ways
Take a savings account paying 4.00%, the calculator’s example until you say what yours pays.
| Single, $150,000 | Savings at 4.00% | Best fund |
|---|---|---|
| Texas | 3.04% | VMSXX 3.34% |
| California | 2.67% | VCTXX 3.06% |
| New York | 2.80% | VYFXX 3.30% |
| New York City | 2.65% | VYFXX 3.30% |
What each keeps after every tax, a year. On $100,000 that is $300 more in the fund in Texas, $392 more in the fund in California, $496 more in the fund in New York and $651 more in the fund in New York City.
Asked about funds and savings
Is a money market fund better than a high-yield savings account?
After tax, it is whenever the savings account pays less than the fund's tax-equivalent yield. For a single filer earning $150,000 a year, that line is 4.39% in Texas, 4.59% in California, 4.71% in New York and 4.98% in New York City on the yields for October 1, 2026.
Is money market fund income taxed like savings interest?
Only partly. Savings interest is taxed federally, with the 3.8% on investment income above $200,000 single or $250,000 joint, and by your state and New York City. A government or Treasury fund is taxed the same federally, but states don't tax the part that came from U.S. government obligations. A municipal fund is free of federal tax; your state taxes it unless you live in Washington, DC or North Dakota or the fund is your own state's (VYFXX for New York and VCTXX for California).
What is a tax-equivalent yield?
What a fully taxable account, like a savings account or a CD, would have to pay to leave you as much after tax as a fund that is taxed less. It is the fund’s after-tax yield divided by what a taxable dollar keeps.
Not counted: a savings account is FDIC-insured and a money market fund is not, and a savings rate can change any day, as a fund’s yield does.
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), ICI, state taxation of state and local obligations (2023), Rev. Proc. 2025-32 and every state's published schedule and Vanguard's daily 7-day SEC yields. 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.