{
  "article": {
    "slug": "headline-rate-trap",
    "title": "The 4.15% account that loses to a 3.98% one",
    "url": "https://financely.ai/articles/headline-rate-trap.html"
  },
  "answer": "A Treasury with a lower advertised rate can beat a higher-rate savings account because Treasury interest is exempt from state and local income tax while savings interest is not. At a 24% federal and 5.75% state marginal rate, a 4.15% savings account nets 2.92% after tax and a 3.98% Treasury nets 3.02%. The exemption is worth roughly your state tax rate times the yield, so it decides nothing in a state with no income tax.",
  "method": "Every figure is produced by a deterministic calculation engine and verified at build time against that engine’s output. Inputs are included so any figure can be reproduced.",
  "claims": [
    {
      "id": "headline-rate-trap-1",
      "statement": "At a 24% federal and 5.75% state marginal rate, a 4.15% high-yield savings account yields 2.92% after tax.",
      "verified": true,
      "computedBy": "yield lens",
      "inputs": {
        "idleCash": 40000,
        "assumptions": {
          "federalMarginalRate": 0.24,
          "stateMarginalRate": 0.0575
        },
        "options": [
          {
            "name": "High-yield savings",
            "apy": 0.0415
          },
          {
            "name": "Treasury",
            "apy": 0.0398,
            "stateTaxExempt": true
          }
        ],
        "currentOptionName": "High-yield savings"
      },
      "verifyAt": "https://financely.ai/tools/yield.html"
    },
    {
      "id": "headline-rate-trap-2",
      "statement": "A 3.98% Treasury yields 3.02% after tax at those same rates, because its interest is exempt from state income tax.",
      "verified": true,
      "computedBy": "yield lens",
      "inputs": {
        "idleCash": 40000,
        "assumptions": {
          "federalMarginalRate": 0.24,
          "stateMarginalRate": 0.0575
        },
        "options": [
          {
            "name": "High-yield savings",
            "apy": 0.0415
          },
          {
            "name": "Treasury",
            "apy": 0.0398,
            "stateTaxExempt": true
          }
        ],
        "currentOptionName": "High-yield savings"
      },
      "verifyAt": "https://financely.ai/tools/yield.html"
    },
    {
      "id": "headline-rate-trap-3",
      "statement": "On $40,000, that ranking inversion is worth $44 a year.",
      "verified": true,
      "computedBy": "yield lens",
      "inputs": {
        "idleCash": 40000,
        "assumptions": {
          "federalMarginalRate": 0.24,
          "stateMarginalRate": 0.0575
        },
        "options": [
          {
            "name": "High-yield savings",
            "apy": 0.0415
          },
          {
            "name": "Treasury",
            "apy": 0.0398,
            "stateTaxExempt": true
          }
        ],
        "currentOptionName": "High-yield savings"
      },
      "verifyAt": "https://financely.ai/tools/yield.html"
    }
  ]
}