Massachusetts residents pay a flat 5% state income tax on CD interest in 2026 (rising to 9% on income over $1 million). The best CD rates available to MA residents reach 4.75% APY through FDIC-insured online banks. Massachusetts-based DCU is also a nationally competitive credit union open to all US residents.
Rates shown are as of May 2026 and change frequently. Verify current rates directly with the institution before opening.
Best CD Rates Available to Massachusetts Residents (May 2026)
| Institution | Type | 12-Month APY | Min. Deposit |
|---|---|---|---|
| Online banks (Ally, Marcus, Discover, CIT) | Online | 4.50–4.75% | $0–$2,500 |
| DCU (Digital Federal Credit Union) | National CU (MA-based) | 4.25–4.60% | $500 |
| Metro Credit Union | MA credit union | 3.75–4.25% | $500 |
| Eastern Bank | MA regional bank | 3.75–4.25% | $1,000 |
| Webster Bank | Regional bank | 3.75–4.25% | $1,000 |
| Traditional big banks | National bank | 0.01–1.00% | $1,000+ |
Massachusetts State Income Tax on CD Interest
Massachusetts has a flat 5% income tax on most income including CD interest. A “Millionaire’s Tax” approved by voters in 2022 adds 4% for income over $1 million, creating a combined 9% state rate for the highest earners.
After-tax yield on a 4.65% CD for a typical MA resident (22% fed + 5% MA):
- Total marginal rate: ~27%
- After-tax yield: ~3.39%
T-Bills vs. CDs for Massachusetts Residents
Treasury bill interest is exempt from Massachusetts state income tax.
| 12-Month CD | 12-Month T-Bill | |
|---|---|---|
| Gross yield | 4.65% | 4.35% |
| Federal taxable | Yes | Yes |
| MA state taxable (5%) | Yes | No |
| After-tax yield (22% fed + 5% MA) | ~3.39% | ~3.40% |
The after-tax yields are nearly identical at these rate levels, meaning the T-bill is a competitive alternative for most MA residents. For those in the 9% state bracket, T-bills are clearly superior.
What $10,000 Earns at Top Available MA Rates
| Term | APY | Gross Interest | After-Tax (22% fed + 5% MA) |
|---|---|---|---|
| 6 months | 4.40% | ~$219 | ~$160 |
| 12 months | 4.65% | ~$465 | ~$339 |
| 2 years | 4.10% | ~$838 | ~$612 |
DCU — A Massachusetts-Based National Credit Union
DCU (Digital Federal Credit Union) is headquartered in Marlborough, MA and is worth highlighting as a top credit union option for CD savers nationwide:
- Open to all US residents through a $10 donation to Reach Out for Schools or American Consumer Council
- Rates: Consistently competitive, often matching top online banks
- Insurance: NCUA-insured
- Access: Entirely online; no branch requirement
DCU’s share certificates frequently appear in national “best CD rates” comparisons.
Other Notable Massachusetts Institutions
- Metro Credit Union — Chelsea-based; open to residents of greater Boston area; competitive rates
- Eastern Bank — Boston-based mutual savings bank turned public company; relationship pricing available
- Rockland Trust — Southeastern MA community bank; competitive rates for local customers
- Needham Bank — Needham-based mutual savings bank; competitive CDs for relationship customers
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