State taxes and money market funds
Which funds' income your state can't tax, the 2025 numbers from sponsor documents, and the tax-equivalent math.
Data: October 2026 month-end SEC filings
All figures are from the October 2026 month-end Form N-MFP filings (report date ) - money-market funds must file within five business days of month-end. Regulatory data, not live quotes.
- For the 2025 tax year, 100.00% of VUSXX's dividend income and 98.67% of FDLXX's came from US government obligations - generally exempt from state income tax; SWVXX reported 0%. Figures are from each sponsor's own tax document.
- California, Connecticut, and New York only allow the exemption if the fund held ≥50% of assets in US government obligations at every quarter-end. For 2025, SPAXX did not meet that test (despite 50.90% USGO income); VUSXX, SNSXX, FDLXX, VMRXX, VMFXX did.
- Example: at a 24% federal and 9.3% state marginal rate, FDLXX's 3.61% 7-day yield is worth about 2.74% after tax - a fully taxable fund would need to yield 4.11% to match it.
2025 USGO percentages, by fund
The share of each fund's 2025 dividends that came from US government obligations (USGO) - the portion most states don't tax. Yields are the current October 2026 month-end filings; USGO figures are the sponsors' own 2025 tax documents, retrieved 2026-07-29. Sponsors publish the next tax year's figures each January.
| Ticker | Fund | 7-day yield (October 2026) | 2025 USGO income | CA/NY/CT test | Source |
|---|---|---|---|---|---|
| VUSXX | Vanguard Treasury Money Market Fund | 3.89% | 100.00% | meets | Vanguard U.S. government obligations income information (2025) |
| SNSXX | Schwab U.S. Treasury Money Fund | 3.61% | 99.99% | meets | Schwab 2025 Supplementary Tax Information |
| FDLXX | Fidelity Treasury Only Money Market Fund | 3.61% | 98.67% | meets | Fidelity 2025 GSE supplemental letter |
| VMRXX | Vanguard Cash Reserves Federal Money Market Fund | 3.89% | 69.58% | meets | Vanguard U.S. government obligations income information (2025) |
| VMFXX | Vanguard Federal Money Market Fund | 3.88% | 66.61% | meets | Vanguard U.S. government obligations income information (2025) |
| FZFXX | Fidelity Treasury Money Market Fund | 3.57% | 61.52% | does not meet | Fidelity 2025 GSE supplemental letter |
| FDRXX | Fidelity Government Cash Reserves | 3.63% | 52.17% | does not meet | Fidelity 2025 GSE supplemental letter |
| SPAXX | Fidelity Government Money Market Fund | 3.55% | 50.90% | does not meet | Fidelity 2025 GSE supplemental letter |
| SNVXX | Schwab Government Money Fund | 3.62% | 36.20% | does not meet | Schwab 2025 Supplementary Tax Information |
| SNOXX | Schwab Treasury Obligations Money Fund | 3.60% | 31.30% | does not meet | Schwab 2025 Supplementary Tax Information |
| SPRXX | Fidelity Money Market Fund | 3.64% | 14.56% | does not meet | Fidelity 2025 GSE supplemental letter |
| SWVXX | Schwab Prime Advantage Money Fund | 3.77% | 0.00% | does not meet | Schwab 2025 Supplementary Tax Information |
The formula
After-tax yield = yield × (1 − federal rate − state rate × (1 − USGO%))
Tax-equivalent (fully taxable) yield = after-tax yield ÷ (1 − federal rate − state rate)
Worked example
An investor with a 24% federal and 9.3% state marginal rate holds FDLXX, whose 7-day yield was 3.61% at October 2026 month-end with 98.67% 2025 USGO income:
- After-tax yield = 3.61 × (1 − 0.24 − 0.093 × (1 − 0.9867)) = 2.74%
- Tax-equivalent yield = 2.74 ÷ (1 − 0.24 − 0.093) = 4.11% - what a fully taxable fund would need to yield to leave the same after-tax income.
Calculator
Municipal (tax-exempt) funds
Municipal money-market funds like VMSXX work on the other axis: their income is generally exempt from federal tax instead. A lower muni yield can beat a higher taxable yield at high federal brackets - the same formula applies with the exemptions swapped. See the tax-exempt fund rankings.
FAQ
Is VUSXX state tax exempt?
For the 2025 tax year Vanguard reports that 100.00% of VUSXX's dividend income came from US government obligations, and the fund met the 50%-of-assets test that California, Connecticut, and New York require - so its income is generally fully exempt from state income tax (verify against your state's rules).
Is SPAXX state tax exempt?
Mostly not, for 2025. Fidelity reports 50.90% of SPAXX's income came from US government obligations - that portion is state-tax-exempt in most states - but SPAXX did NOT meet the 50%-of-assets-at-each-quarter-end test, so California, Connecticut, and New York residents get no exemption at all. FDLXX (98.67%, test met) is Fidelity's money market fund for state-tax efficiency.
How do I calculate the tax-equivalent yield of a money market fund?
After-tax yield = yield × (1 − federal rate − state rate × (1 − USGO fraction)). Divide that by (1 − federal rate − state rate) to get the yield a fully taxable fund would need to match. Example at 24% federal / 9.3% state: FDLXX's 3.61% 7-day yield with 98.67% USGO income is 2.74% after tax, equivalent to a 4.11% fully taxable yield.