how much state tax will i save with us treasuries

Interest from U.S. Treasuries is generally exempt from state and local income tax , so your savings are roughly your state’s marginal tax rate multiplied by the taxable Treasury interest you earned.

Simple formula

• State tax saved = Treasury interest × your state income tax rate
• Example: if you earned $10,000 in Treasury interest and your state rate is 5% , you’d save about $500 in state tax.
• If your state has no income tax, the savings are $0.

What counts

• Direct Treasury bills, notes, and bonds are usually state-tax exempt.

• Treasury-heavy funds and ETFs can also pass through some state-tax-exempt income, but the exempt portion depends on the fund’s holdings.

• TreasuryDirect’s tax guidance also reflects separate federal and state tax inputs for Treasury savings products.

Quick examples

State tax rate	Tax saved on $1,000 of Treasury interest
3%	$30
5%	$50
9%	$90
13.3%	$133

One example from a recent article estimated that a Colorado investor with **$5,000** of deductible Treasury-related interest would save about **$220** at Colorado’s **4.4%** flat state tax rate.

What changes the amount

• Your state marginal rate.
• How much Treasury interest you earned.
• Whether you held Treasuries directly or through a fund.
• Special state rules in places like California, New York, and Connecticut.

Bottom line

For direct Treasuries, a fast estimate is: multiply your Treasury interest by your state tax rate. A higher-tax state can make the savings meaningful, while no-income-tax states produce no state-tax benefit.

TL;DR: U.S. Treasury interest usually avoids state tax, so the amount you save is basically your state rate times the interest you earn.