Treasury fund in taxable account, good idea?

[petestan]

I am 60 yrs old, retired, live in Massachusetts and in the 10-15% bracket. For years I have owned VMATX, Vanguard Massachusetts Tax Exempt. In my Roth, I own VICSX, Vanguard Intermediate Term Corporate Bond and in my IRA, I have DBLTX, Double Line Total Return Bond which is mostly in mortgages. In both tax deferred accounts I have other investments like an international bond and a real estate fund.

I don't think it is worth it to have the muni fund considering my tax rate and was thinking of replacing it with VFITX, Vanguard Intermediate Treasury or with VFISX Short Term Treasury since I don't own any treasuries but already have corporate and securitized bonds. Would this be a good idea and if so, should I go with short term or intermediate term?

I am not looking to make any changes to my deferred accounts and am looking to increase my bond holdings and plan on selling some stock to also add to the treasury fund. In Massachusetts the state rate is 5.1% on income and I read that treasury bonds are state tax exempt.

Would appreciate any feedback.

Thank you

 

[FIRE'd@51]

You need to compare after-tax yields, and yes, Treasuries are free from state income taxes. Assuming you are in the 12% bracket, the question is whether 0.88 x Treasury Yield is greater than the yield on the MA tax exempts, assuming they both have comparable interest-rate risk (duration).