Bank Gap by State
The Bank Gap in Louisiana
Louisiana simplified its income tax to a flat 3.0% rate in a 2021 reform, one of the lower rates among states that tax income at all, against a cost of living below the national average.
Last reviewed August 7, 2026 · SwitchWize Research Desk
Before LA tax
$1,005/yr
on a $25,000 balance
After LA 3% tax
$975/yr
recoverable by switching
On a $25,000 balance, the gap is about $1,005 a year before tax. After Louisiana's 3% top income-tax rate on the additional interest, you keep about $975. Because Treasury interest is exempt from Louisiana income tax, routing that cash through a state-tax-exempt Treasury vehicle can recover most of the difference.
Estimated Bank Gap by balance
| Balance | Current earnings | Better-fit earnings | Estimated Bank Gap | After LA tax |
|---|---|---|---|---|
| $5,000 | $19 | $220 | $201 | $195 |
| $10,000 | $38 | $440 | $402 | $390 |
| $25,000 | $95 | $1,100 | $1,005 | $975 |
| $50,000 | $190 | $2,200 | $2,010 | $1,950 |
| $100,000 | $380 | $4,400 | $4,020 | $3,899 |
Estimates over 12 months at 0.38% current APY and 4.40% better-fit APY. The "After LA tax" column applies LA's 3% top income-tax rate to the additional interest; federal tax applies on top and is not shown. Example only — your result depends on your balance, rates, and time horizon.
Why Louisiana changes the math
Louisiana taxes interest income at a flat 3.0% rate. Treasury interest is exempt from that tax, but at this rate the after-tax edge from T-Bills over a top taxable HYSA is small for most savers — the bigger lever in Louisiana is simply finding the highest APY.
A below-average cost of living keeps typical Louisiana emergency-fund balances modest, though coastal insurance and housing costs have been rising in parts of the state.
Cost of living in Louisiana is below the national average, which shapes how large an emergency fund needs to be and therefore how many dollars the Bank Gap quietly costs on idle cash.
Because Louisiana taxes savings interest but not Treasury interest, the highest after-tax yield is not always the highest headline APY. Run your tax profile through the short-term savings tool to see whether a Treasury bill or government money market fund beats a taxable account for you.
Open the short-term savings toolFrequently asked questions
Does Louisiana tax high-yield savings account interest?
Is a high-yield savings account worth it in Louisiana?
Are T-Bills better than a HYSA for Louisiana savers?
Your personal Bank Gap
See exactly what the gap is costing you.
Enter your balance and current rate. The Rate Gap Calculator shows the gap per year and over five years.
Calculate my Bank GapEducational information, not tax or financial advice. State tax rules are summarized at a high level and depend on your full situation. Rates are illustrative of current market conditions and should be confirmed with the provider. Confirm tax treatment with a qualified professional.