Is SGOV state tax exempt? 95.14% of its 2025 dividends are, in 39 states

iShares reports that 95.14% of the iShares 0-3 Month Treasury Bond ETF's (SGOV) 2025 income came from U.S. government obligations, and marks SGOV as a fund that kept at least 50% of its assets in them at every quarter-end. In 39 states that share of your SGOV dividends is exempt from state income tax. 9 states do not tax dividends at all. The District of Columbia, Hawaii and Kentucky exempt interest on Treasuries you own directly, but we found no rule that extends it to fund dividends.

• The number to use: 95.14% of the ordinary dividends in box 1a of your 2025 Form 1099-DIV from SGOV. Of $1,000 of SGOV dividends, $951.40 is U.S. government income. iShares' statement says the box 1a amount “should be multiplied by the applicable percentages below to obtain the dollar amount of income derived from the sources categorized below”.
• California, Connecticut and New York exempt a fund's U.S. government share only if the fund held at least 50% of its assets in those obligations at the end of each quarter. iShares' footnote for SGOV: “At least 50% of the assets of the fund were invested in Federal Obligations at the end of each quarter of the fiscal year.”
• The share changes every year. It was 96.45% for 2023. Use the figure for the tax year on your return.
• Federal tax still applies. SGOV's dividends are taxed as ordinary income on your federal return; only the state exemption depends on this percentage.
• To see what the exemption is worth on your income, use our cash yield after tax calculator, which compares SGOV with savings, Treasury bills and money funds in every state.
• Comparing SGOV with a savings account, a CD or a money market fund, or wondering how it works in an IRA? See SGOV next to savings, CDs and money market funds.

Quick answers

Are SGOV dividends state tax exempt?

Mostly, in 39 states: 95.14% of SGOV's 2025 dividends were U.S. government income, and those states exempt that share. 9 states do not tax dividends at all. The District of Columbia, Hawaii and Kentucky are the exceptions: we found no rule there that exempts a fund's dividends. Your state is in the table below.

What percentage of SGOV is state tax exempt?

95.14% for tax year 2025, from iShares' 2025 statement. The remaining 4.86% is taxable in every state that taxes dividends. The share changes each year (96.45% for 2023); the 2026 figure comes with iShares' statement for 2026, usually in January or February.

Is SGOV tax exempt in California?

Yes, for the 95.14% share, because SGOV met the 50% test. California's 2025 Schedule CA instructions: “If the mutual fund has at least 50% of its assets invested in tax-exempt U.S. obligations and/or in California or its municipal obligations, that amount of dividend is exempt from California tax.” You subtract it on Schedule CA (540), Part I, line 2, column B. Connecticut and New York apply the same 50% test; see their rows in the table.

Is SGOV tax free? Is it taxed as dividends?

No, not federally. SGOV's payouts are dividends, reported in box 1a of Form 1099-DIV, and its summary prospectus says “The Fund intends to make distributions that may be taxable to you as ordinary income or capital gains”, unless you hold it in a 401(k), an IRA or a similar account. Only state tax can be reduced, through the U.S. government share above.

How do I claim the exemption on my state return?

Multiply the ordinary dividends in box 1a of your 2025 Form 1099-DIV from SGOV by 95.14%, and subtract the result on the line the table shows for your state. Of $1,000 of dividends, that is $951.40. Where TaxAct, FreeTaxUSA, TurboTax and other programs ask for it: U.S. government interest in tax software.

What is SGOV's tax-equivalent yield?

It depends on your state's tax rate and your income. Our cash yield after tax calculator works it out for SGOV next to a savings account, Treasury bills and money funds, in every state.

How often does SGOV pay dividends?

Monthly, according to SGOV's product page at iShares. Whether they are reinvested depends on your brokerage; see how 15 brokerages handle SGOV's dividends.

Is SGOV better than a high-yield savings account?

That depends on what the cash is for. SGOV is not FDIC insured, its price moves slightly, and a sale takes one business day to settle; a savings account is insured but its interest is taxed by your state. The details, from the FDIC, the SEC and iShares, are in SGOV next to savings, CDs and money market funds.

SGOV's dividends in all 50 states and D.C.

SGOV next to other Treasury ETFs and money funds (2025)

For California, Connecticut and New York the 50% test decides everything: a fund that missed it has none of its dividends exempt there, whatever its U.S. government share. Fidelity marks such funds with an asterisk and explains: “These funds did not meet the minimum investment in U.S. government securities required to exempt the distribution from tax in California, Connecticut, and New York.” Vanguard marks the funds that “meets the threshold requirements for California, Connecticut, and New York”.

Side by side: VUSXX vs SGOV: which keeps more after state tax, in all 50 states and D.C.

Side by side: SGOV vs BIL: which keeps more after state tax, in all 50 states and D.C.

SGOV next to savings, CDs and money market funds

Searches for SGOV often pair it with a savings account, a CD or a money market fund. These are the differences that the regulators and iShares themselves spell out, read on October 10, 2026. Which suits your cash is your decision; to compare after-tax yields in your state, use the calculator.

SGOV vs a high-yield savings account

• Deposit insurance. A savings account at an FDIC-insured bank is a deposit. The FDIC: “The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.” SGOV is not a deposit; its fact sheet carries the line “Not FDIC Insured - No Bank Guarantee - May Lose Value”. The FDIC lists Treasury bills among the products it does not insure, with the note “These investments are backed by the full faith and credit of the U.S. government.” SGOV holds Treasury bills, but what you own is ETF shares, and the SEC says “Like mutual funds, ETFs are not guaranteed or insured by the FDIC or any other government agency.”
• Price. A savings balance does not move; SGOV's price does, slightly. Its summary prospectus: “Direct obligations of the U.S. Treasury have historically involved little risk of loss of principal if held to maturity, but the market value of such securities is not guaranteed and may fluctuate.” iShares listed SGOV's net asset value at $100.51 on October 9, 2026, with a 52-week range of $100.27 to $100.73.
• State tax. Savings interest is taxed by every state with an income tax on interest; IRS Publication 550: “Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources.” Most of SGOV's dividends are exempt in 39 states (the table above). The IRS statement that Treasury interest is “exempt from all state and local income taxes” is about Treasuries you own directly; a fund's dividends follow each state's own rule.
• Getting the money out. SGOV trades only while the market is open; the SEC: “ETF investors can trade their shares on the market at the market price whenever the market is open—minus any fees.” A sale then settles one business day later: “Under the new “T+1” settlement cycle, all applicable securities transactions from U.S. financial institutions will settle in one business day of their transaction date.” How soon the cash can move to your bank after that depends on your brokerage.

SGOV vs a CD

• Insurance. FDIC insurance “only covers certain deposit products, such as checking and savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs).”
• Leaving early. The SEC: “If you redeem your CD before it matures, the terms of the CD may require you to pay an “early withdrawal” penalty or forfeit a portion of the interest you earned.” A CD bought through a brokerage works differently: “Brokered CDs generally do not have early withdrawal penalties like CDs purchased directly from a bank.” “However, if you sell a brokered CD in the secondary market, you may lose some of your original investment due to a change in the market price of the CD.” Selling SGOV shares carries no early-withdrawal penalty; you get the market price on the day you sell, less any fees.
• Tax. CD interest is taxed like savings interest, including by your state. IRS Publication 550: “You must report the total amount of interest paid or credited to your account during the year without subtracting the penalty.”

SGOV vs a money market fund such as SPAXX

• A stable $1 against a floating price. The SEC: “Most money market funds – including money market funds intended for retail investors and government money market funds – seek to keep their NAV at a stable $1.00 per share.” SGOV's price floats with its holdings.
• No FDIC insurance for either. “In addition, money invested in a money market fund is not guaranteed by the FDIC like bank accounts are.”
• Selling. “This means that investors can generally sell their shares back to a money market fund on any business day at the net asset value (NAV) per share.” SGOV is sold on the market and settles the next business day.
• State tax. Here the gap can be large. Fidelity's Government Money Market Fund (SPAXX) reported 50.90% U.S. government income for 2025 and did not meet the 50% test, so California, Connecticut and New York tax all of its dividends; SGOV's 95.14% met the test. See Is SPAXX state tax exempt? and the 12-fund comparison.

SGOV for an emergency fund

The regulators that write about emergency funds do not mention ETFs. The SEC's investor education office describes one as “rainy-day money you keep in a bank or credit union to use if you have an unexpected expense, like a cracked phone screen, car or house repair, or family emergency.” The Consumer Financial Protection Bureau says “Where you put your emergency fund depends on your situation. You want to make sure this fund is safe, accessible, and in a place where you’re not tempted to spend it on non-emergencies.” For money you may need at short notice, the differences above are the ones to weigh: insurance, price, and how fast a sale turns into cash.

SGOV in a Roth IRA or a traditional IRA

• Federal tax. SGOV's summary prospectus: “The Fund intends to make distributions that may be taxable to you as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement such as a 401(k) plan or an IRA, in which case, your distributions generally will be taxed when withdrawn.” For a Roth IRA, IRS Publication 590-B: “You don't include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s).” For a traditional IRA: “Distributions from traditional IRAs that you include in income are taxed as ordinary income.”
• The state exemption inside an IRA depends on the state. Arizona's 2025 instructions: “Do not subtract any amount received from an IRA that invests in U.S. Government obligations.” Minnesota: “Minnesota taxes federally taxable distributions from pension plans, including IRAs and Keoghs which are partially or fully funded by U.S. obligations. The U.S. interest earned by the pension plan is not allowed as a subtraction.” Wisconsin does the opposite: such a distribution “is exempt from Wisconsin income tax to the extent the distribution is attributable to interest from those U.S. government securities”, and Oregon allows a subtraction for the U.S. government interest in IRA distributions when its conditions are met (subtraction code 331). California's and New York's 2025 instructions do not address the question, and we have not checked every state.

Sources for this section, read October 10, 2026: FDIC, Deposit Insurance FAQs; FDIC, Financial Products That Are Not Insured by the FDIC; iShares, SGOV fact sheet (PDF); iShares, SGOV summary prospectus, June 29, 2026 (PDF); iShares, SGOV product page; SEC, Investor.gov: Exchange-Traded Funds (ETFs); SEC, Investor.gov: Money Market Funds; SEC, New “T+1” Settlement Cycle (March 27, 2024); SEC, Brokered CDs: Investor Bulletin (Nov. 30, 2023); SEC, World Investor Week 2026 (Oct. 5, 2026); CFPB, An essential guide to building an emergency fund; IRS, Publication 550 (2025); IRS, Publication 590-B (2025); Arizona, 2025 Form 140 instructions (PDF); Minnesota Department of Revenue, U.S. Government Interest; Wisconsin, Publication 126 (PDF); Oregon, Publication OR-17, 2025 (PDF).

How we built the table

• Each state's rule was read from its own 2025 instructions, regulations or statutes; the links are in the table. The same rules drive our cash yield after tax calculator.
• The fund figures are the sponsors' own 2025 statements, read again on September 30, 2026.
• iShares' definition of U.S. government obligations includes Treasury bills, notes and bonds and some agency obligations. SGOV holds Treasury bills.
• For Fidelity's Government Money Market Fund (SPAXX), see Is SPAXX state tax exempt?; for twelve funds from Fidelity, Vanguard, Schwab, iShares and State Street side by side, see state tax exempt money market funds.
• This page does not cover capital gains from selling SGOV shares, which states tax as ordinary gains.

Rechecks and changes

We will update the figures when the sponsors publish their 2026 statements, usually in January and February.

• October 17, 2026. Added quick answers to the questions readers search for: the exempt percentage, California, whether SGOV is tax free, how to claim the exemption, the tax-equivalent yield and how often SGOV pays.
• October 10, 2026. Added a section comparing SGOV with savings accounts, CDs and money market funds, as an emergency fund and inside an IRA, from the FDIC, the SEC, the CFPB, the IRS, iShares and four states' instructions.
• September 30, 2026. First published.

Sources: iShares, 2025 U.S. Government Source Income Information; iShares, 2023 U.S. Government Source Income Information; Vanguard, 2025 U.S. government obligations information (January 2026); Fidelity, tax year 2025 government securities supplemental letter; and each state's source in the table. Dollars Ahead is not affiliated with iShares, Vanguard, Fidelity or any state. This page reports what the funds and the states publish. It is not tax advice.