Which one of these Fidelity funds is better in a state with income taxes?

[Evee]

https://fundresearch.fidelity.com/mutual-funds/summary/31617H102
https://fundresearch.fidelity.com/mutual-funds/summary/316341304

 

[mrfeh]

https://fundresearch.fidelity.com/mutual-funds/summary/31617H102
https://fundresearch.fidelity.com/mutual-funds/summary/316341304

Unfortunately, there's no way to know until the end of the year. The percentage of government obligations varies from year to year.

Here is last year's data: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/TY23-GSE-Supplemental-Letter.pdf

Unless you are holding a massive amount of either, I wouldn't worry about it.

 

[imbatman]

You really want this one (pure treasuries, no repurchase agreements...so fully deductible in most states):
https://fundresearch.fidelity.com/mutual-funds/summary/31617H300

Depending on your fed and state tax rates and their rules on deductibility, this one (muni federal tax exempt) may also make sense, but I have found the above to be the best over longer periods of time:
https://fundresearch.fidelity.com/mutual-funds/summary/316341403
https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/taxes/2023-tei-by-month.pdf

You can't make either of these an auto-sweep in your Fido account, but once you buy it, they will auto pull from it when you make any orders/ withdrawals.

 

[Evee]

Unfortunately, there's no way to know until the end of the year. The percentage of government obligations varies from year to year.

Here is last year's data: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/TY23-GSE-Supplemental-Letter.pdf

Unless you are holding a massive amount of either, I wouldn't worry about it.

So if I am reading that pdf right it is the government one. Is that right? Unless it changes in 2024. I am in the 12% bracket with a 5% state tax.

 

[mrfeh]

So if I am reading that pdf right it is the government one. Is that right? Unless it changes in 2024. I am in the 12% bracket with a 5% state tax.

Yeah, they don't list them by ticker, unfortunately. Need to search for "Treasury Money Market Fund" and "Government Money Market Fund" in your case.

Here's the same document from 2022, to give you an idea of how they change: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/taxes/GSE-Supplemental-Letter.pdf

 

[Evee]

Thanks to both of you guys.

 

[ncbill]

FDLXX for me to avoid my state's current 4.5% flat tax...declining to 4.25% in 2025, then 3.99% afterwards.

 

[OldShooter]

Standard caution for threads like this: Don't let the tax tail wag the investment dog.

Investments that are exempt from income taxes usually yield less than taxable investments, so the planning goal has to be to maximize money-in-pocket when the game ends. This goal may require paying some income taxes along the way.