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Kentucky After-Tax Yield Calculator

What a savings account or CD keeps after Kentucky's income tax (a flat 3.5% in 2026) and federal tax, and whether a Treasury bill, which Kentucky can't tax, keeps more.

In Kentucky, a 4.5% APY keeps 3.35% after 22% federal and 3.5% state tax. A 4% Treasury bill, which Kentucky can't tax, keeps 3.12%, so the savings account keeps 0.23% more.

Savings keeps, after tax
3.35%
Treasury bill keeps, after tax
3.12%
Better after tax
Savings or CD
Treasury yield that matches the APY
4.30%

Kentucky income tax brackets, 2026 (taxable income)

RateSingle filersMarried filing jointly
3.50%Over $0Over $0

What a 4.50% APY keeps in Kentucky, by state bracket (22% federal bracket)

Kentucky rateSavings or CD keepsT-bill yield that matches it
3.50%3.35%4.30%

How this calculator works

Bank interest (savings, money market and CDs) is ordinary income to Kentucky and to the IRS. After-tax yield = APY × (1 − federal rate − Kentucky rate − local rate).

Treasury bills, notes and bonds are taxed only federally: federal law bars states from taxing their interest (31 U.S.C. 3124). After-tax yield = T-bill yield × (1 − federal rate).

The Kentucky rates are its 2026 brackets as compiled by the Tax Foundation from state law. Choose the bracket your taxable income falls in; the calculator starts at the rate for a single filer with $75,000 of taxable income (3.50%).

What it assumes

  • Your marginal rates apply to all of the interest.
  • Some Kentucky cities, counties or school districts tax income as well (on average 0.93% of income where they do). Enter yours as local income tax if it reaches interest.
  • It ignores the state tax deduction on your federal return, which matters only if you itemise and are under the SALT cap.

Questions people ask

Does Kentucky tax interest from savings accounts and CDs?

Yes. Kentucky taxes bank interest as ordinary income at a flat 3.5% in 2026, on top of federal income tax.

Are Treasury bills taxable in Kentucky?

No. Interest on Treasury bills, notes, bonds and US savings bonds is exempt from Kentucky income tax by federal law. It is still taxed federally.

Is a T-bill or a CD better in Kentucky?

At Kentucky's 3.50% rate and a 22% federal bracket, a 4.50% CD keeps 3.35%, the same as a T-bill yielding 4.30%. A T-bill paying more than that keeps more.

Do Treasury money market funds avoid Kentucky tax?

Most states let you exclude the share of a fund's dividends that came from Treasury interest. Check Kentucky's income tax instructions for the rule and the percentage your fund reports.

Other states

Terms explained

Related calculators

  • After-Tax Yield CalculatorWhat a savings or CD rate keeps after federal and state income tax, and whether a Treasury bill, which is free of state tax, keeps more.
  • Savings CalculatorWhat a savings account grows to at an APY, with a deposit every month, year by year.
  • CD CalculatorWhat a certificate of deposit earns by maturity, and what you keep if you close it early and pay the penalty.

Sources

Updated by the RateHerald team. The maths is tested against worked examples; report a problem.