Bank Gap by State

The Bank Gap in North Dakota

North Dakota has one of the lowest top income-tax rates of any state that taxes income at all, supported in part by oil and gas revenue, which keeps the Bank Gap decision simple even for higher earners.

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

ND tax on interest

2.50%

top marginal rate

Before ND tax

$1,005/yr

on a $25,000 balance

After ND 2.5% tax

$980/yr

recoverable by switching

On a $25,000 balance, the gap is about $1,005 a year before tax. After North Dakota's 2.5% top income-tax rate on the additional interest, you keep about $980. Because Treasury interest is exempt from North Dakota 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 ND state income tax
Balance	Current earnings	Better-fit earnings	Estimated Bank Gap	After ND tax
$5,000	$19	$220	$201	$196
$10,000	$38	$440	$402	$392
$25,000	$95	$1,100	$1,005	$980
$50,000	$190	$2,200	$2,010	$1,960
$100,000	$380	$4,400	$4,020	$3,920

Estimates over 12 months at 0.38% current APY and 4.40% better-fit APY. The "After ND tax" column applies ND's 2.5% 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 North Dakota changes the math

North Dakota taxes interest income at a top rate of 2.5%, among the lowest in the country. 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 — chasing the highest APY does most of the work here.

A below-average cost of living keeps typical North Dakota emergency-fund balances modest, and the low state tax rate means most of the Bank Gap flows through untouched.

Cost of living in North Dakota 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.

After-tax tip

Because North Dakota 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 North Dakota tax high-yield savings account interest?

Yes. North Dakota treats savings interest as taxable income, with a top rate of 2.5%. Interest from U.S. Treasury bills and the Treasury portion of a government money market fund is generally exempt from North Dakota income tax, which can change the after-tax winner for higher earners.

Is a high-yield savings account worth it in North Dakota?

Yes. Even after North Dakota 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 North Dakota savers?

They can be for higher earners. Because Treasury interest is exempt from North Dakota 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

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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.