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.

Big-bank average0.38%

Best available4.40%

$1,005/yrlost on a $25k balance · 4.02 pp spread

Last reviewed August 7, 2026 · SwitchWize Research Desk

Best savings APY

4.40%

high-yield

National average

0.38%

big-bank avg

APY gap

4.02 pp

spread

NY tax on interest

10.90%

top marginal rate

Before NY tax

$1,005/yr

on a $25,000 balance

After NY 10.9% tax

$895/yr

recoverable by switching

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.

Estimated Bank Gap by balance

Estimated annual Bank Gap by balance at 0.38% current APY versus 4.40% better-fit APY, before and after NY state income tax
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.

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.

After-tax tip

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 tool

Frequently asked questions

Does New York tax high-yield savings account interest?

Yes. New York treats savings interest as taxable income, with a top rate of 10.9%. Interest from U.S. Treasury bills and the Treasury portion of a government money market fund is generally exempt from New York income tax, which can change the after-tax winner for higher earners.

Is a high-yield savings account worth it in New York?

Yes. Even after New York state tax, moving cash from a national-average account to a top high-yield savings account still leaves you with substantially more interest. The Bank Gap is far larger than the state-tax drag on the additional interest.

Are T-Bills better than a HYSA for New York savers?

They can be for higher earners. Because Treasury interest is exempt from New York income tax, a T-Bill or government money market fund can deliver a higher after-tax yield than a fully taxable savings account at a similar headline rate. The short-term savings calculator computes the breakeven for your exact tax situation.

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 Gap

The Bank Gap (national) Bank Gap in Connecticut Bank Gap in Maine Bank Gap in Massachusetts Bank Gap in New Hampshire Browse all 50 states Methodology

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.