Most Tax Efficient Money Market Fund for NYC Resident

Submitted by CopperQuilt t3_127wfcd in personalfinance

What is the most tax-efficient Money Market Fund based on my marginal tax rates? I am a NYC resident. Also, if it makes sense for me to buy a MMF that is fed and or state/local exempt, do I need to do any calculations on my eventual tax forms or does the broker do that on the 1099? I currently am in SPAXX so I know I'll have at least some taxable interest from MMF when I file taxes next year

Fed: 24%

NY: 6.25%

NYC: 3.876%

Context: I have invested most of my emergency money in t-bills but want to stash a few thousand in money markets in case I need the money more quickly and don't want to risk selling t-bills on the secondary market

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DeluxeXL t1_jeg6der wrote

>Fed: 24%

>NY: 6.25%

>NYC: 3.876%

Since you use Fidelity,

Fund SEC yield as of 3/30 Federal exempt State/Local exempt less FIT and SIT+LIT After-tax yield
SPRXX 4.54% 0% exempt 0% exempt -0.24 -0.10126 2.99%
FDRXX 4.50% 0% exempt 0% exempt -0.24 -0.10126 2.96%
SPAXX 4.48% 0% exempt 0% exempt -0.24 -0.10126 2.95%
FZFXX 4.46% 0% exempt 0% exempt -0.24 -0.10126 2.94%
FDLXX 4.22% 0% exempt ~94% exempt -0.24 -0.0060756 3.18%
FTEXX 3.87% 100% exempt 0% exempt -0.00 -0.10126 3.48%
FMOXX 3.81% 100% exempt 0% exempt -0.00 -0.10126 3.42%
FAWXX 3.70% 100% exempt 100% exempt -0.00 -0.00 3.70%
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[deleted] t1_jegeqny wrote

Damn. Hats off if you did the math yourself. If not where did you find the table I need one for CA. Very informative

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DeluxeXL t1_jegglkr wrote

I believe the state income tax rate that corresponds to 24% federal in California is 9.3%.

>Fed: 24%

>CA: 9.3%

Fund SEC yield as of 3/30 Federal exempt State/Local exempt less FIT and SIT+LIT After-tax yield
SPRXX 4.54% 0% exempt 0% exempt -0.24 -0.093 3.03%
FDRXX 4.50% 0% exempt 0% exempt -0.24 -0.093 3.00%
SPAXX 4.48% 0% exempt 0% exempt -0.24 -0.093 2.99%
FZFXX 4.46% 0% exempt 0% exempt -0.24 -0.093 2.97%
FDLXX 4.22% 0% exempt ~94% exempt -0.24 -0.00558 3.18%
FTEXX 3.87% 100% exempt 0% exempt -0.00 -0.093 3.51%
FMOXX 3.81% 100% exempt 0% exempt -0.00 -0.093 3.46%
FABXX 3.30% 100% exempt 100% exempt -0.00 -0.00 3.30%
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[deleted] t1_jeggsag wrote

How do you do that? Do you have an excel sheet or something? 🙏. Thanks very much

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DeluxeXL t1_jegiazj wrote

When you are on Fidelity, click News & Research, Mutual Funds. Then screen the funds to only money market funds, Fidelity funds only, require less than 2.5k initial investment, you get 11 funds in the list.

Switch the view to "Daily pricing / yields" to see the 7-day yields. Sort by this 7-day yield.

Apply the "50% rule" (If a fund contains less than 50% of the thing that makes it tax-exempt, it is completely not tax-exempt). I know only FDLXX has >50% in US Treasury and US Gov Obligations. All of the funds above it in the list are dominated by Repurchase Agreements, which are not state tax exempt.

Then it's just a matter of multiplying the numbers. Example: 4.54% x (1 -0.24 -0.093) = 3.03%

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palindsay t1_jeg6fdh wrote

VNYTX - Vanguard New York Long-Term Tax-Exempt Fund Investor

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