Money market funds and accounts explained
A money market account is a bank deposit, covered by FDIC insurance up to the limit. A money market fund is a mutual fund that holds short-term debt; it is not FDIC insured.
Tax differs by what the fund holds
- Government and Treasury funds: part of the income may be exempt from state tax, depending on holdings and your state.
- Municipal money funds: income often free of federal tax.
- Bank money market accounts: interest taxed federally and by your state.
Alternatives with similar risk
Treasury bills, short CDs and short-term bond funds can pay more or less depending on the rate cycle. IncomeGrid ranks every item by yield after tax for where you live: federal, state and each investment type (Treasuries, municipal bonds, corporate bonds, funds, REITs and filed offerings are each taxed differently).
See the comparison
IncomeGrid has 40,000+ investment options screened, including money-market funds and Treasuries, each with a risk level 1–5.
Compare money market options →
Sources
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