OK, so then what is a Treasury bills tax equivalent APY?
(You may want to skip this question if you’re in a state without state/local income tax.) The tax equivalent rate recognizes that the T-bill is state/local tax free, and savings and CD accounts are not. Therefore, you’ll have a higher return on a T-bill with the same APY as you’d have with a savings account or CD. It does not mean you actually get a higher return THAN the APY, it means that this is the APY a savings account or CD (or other state/local taxable investment) would have to have, in order to beat the return of the T-bill. The tax equivalent APY depends on three factors: (1) your marginal state and local rate, (2) your federal rate, (3) whether or not you itemize.
