How to use this calculator
- T-bill yield: type the rate you’d get, or press “Use the 3-month yield” for the Treasury’s latest 3-month yield.
- Dividend yield: the stock’s or fund’s yearly dividends divided by its price, from its quote page.
- Qualified or ordinary: last year’s Form 1099-DIV shows the qualified part in box 1b. Dividends are only qualified if you hold the shares long enough; the Holding Period Calculator checks that.
- Taxable income and filing status: they set your federal rates, using the 2026 IRS figures.
The idea
T-bill after tax = Interest − federal tax − NIIT
Dividends after tax = Dividends − federal tax − NIIT − state tax
Breakeven yield = the dividend yield where the two are equal
The two incomes are taxed differently. T-bill interest is ordinary income for federal tax, at your regular bracket, but no state or city may tax it. Qualified dividends get the lower 0%, 15% or 20% federal rate, but your state taxes them. Which one wins depends on your bracket and your state.
Worked example
The starting numbers: $10,000, a 4.25% T-bill, a stock yielding 3.50% with qualified dividends, single, $80,000 of taxable income and a 5% state tax.
- The T-bill pays $425.00 of interest. At 22% federal, that’s $93.50 of tax and no state tax: you keep $331.50.
- The stock pays $350.00. At the 15% qualified rate, $52.50; at 5% state, $17.50: you keep $280.00.
- The dividends keep 80% of each dollar. To keep $331.50, they’d need to pay $331.50 ÷ 0.8 = $414.38, a yield of 4.14%.
So a qualified dividend yield of about 4.14% matches this 4.25% T-bill. Switch the dividends to ordinary and the breakeven jumps to 4.54%, because those are taxed at 22% plus state.
What the yields don’t tell you
- Risk. A T-bill pays back its full amount at maturity. A stock’s price moves every day, and a company can cut its dividend.
- The rate changes. A 3-month T-bill locks its rate for three months; when you roll it into the next one, you get whatever rates are then. A dividend can grow over the years, or shrink.
- Growth. A dividend stock may also rise in price. A T-bill never pays more than its rate. The Dividends vs Savings or CD calculator shows that over many years.
About the Treasury yields shown
The yields under the T-bill field come from the U.S. Treasury’s daily par yield curve rates, fetched once each business day and shown with their date. They are “bond-equivalent” yields, the way the Treasury quotes them. The rate you get on a T-bill you buy can differ slightly, depending on the auction or the price at your broker.
For the full tax on a year of dividends, use the Dividend Tax Calculator.
Sources
- IRS Publication 550: Treasury bill interest is taxed federally and exempt from state and local income taxes.
- IRS Rev. Proc. 2025-32: 2026 brackets and qualified dividend rates.
- U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates.