Bank Gap by State
The Bank Gap in New York
New York savers face the national Bank Gap on top of a high state income tax and, for city residents, a local one. That combination makes both the cost of inertia and the tax treatment of cash worth a closer look.
Last reviewed June 23, 2026 · SwitchWize Research Desk
| Balance | Current earnings | Better-fit earnings | Estimated Bank Gap | After NY tax |
|---|---|---|---|---|
| $5,000 | $19 | $220 | $201 | $179 |
| $10,000 | $38 | $440 | $402 | $358 |
| $25,000 | $95 | $1,100 | $1,005 | $895 |
| $50,000 | $190 | $2,200 | $2,010 | $1,791 |
| $100,000 | $380 | $4,400 | $4,020 | $3,582 |
Estimates over 12 months at 0.38% current APY and 4.40% better-fit APY. The "After NY tax" column applies NY's 10.9% 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.
On a $25,000 balance, the gap is about $1,005 a year before tax. After New York's 10.9% top income-tax rate on the additional interest, you keep about $895. Because Treasury interest is exempt from New York income tax, routing that cash through a state-tax-exempt Treasury vehicle can recover most of the difference.
Why New York changes the math
New York taxes interest income at a top state rate of 10.9%, and New York City adds a local income tax on top. Treasury interest is generally exempt from state and local income tax, so for high earners a T-Bill or government money market fund can deliver a higher after-tax yield than a fully taxable savings account at a comparable rate.
With living costs among the highest in the country, a New York emergency fund tends to be a large balance, which makes leaving it at a national-average rate especially expensive.
Cost of living in New York is among the highest in the country, especially in the New York City metro, which shapes how large an emergency fund needs to be and therefore how many dollars the Bank Gap quietly costs on idle cash.
Because New York 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 New York tax high-yield savings account interest?
Is a high-yield savings account worth it in New York?
Are T-Bills better than a HYSA for New York savers?
Enter your balance and current rate. The Rate Gap Calculator shows exactly what the gap is costing you, per year and over five years.
Educational 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.