BOXX ETF After-Tax Return Calculator vs. T-Bills (SGOV)

If you somehow reached this page before reading the separate blog post on BOXX that fully explains the fund, go do that first, otherwise this calculator probably won't make much sense.

Both BOXX and a T-bills ETF like SGOV target a yield in the neighborhood of the risk-free rate, but they get there differently, and the IRS treats them very differently. (I'm using SGOV as the example here for comparison purely because it's a very popular T-bills fund.)

BOXX uses box spreads to defer gains and target long-term capital gains treatment. SGOV holds actual T-bills and pays ordinary income monthly. This calculator focuses primarily on the tax dimension of that difference.

One additional nuance to keep in mind is that box spreads have historically earned a ~0.25-0.35% premium above T-bill yields – a “convenience yield” that exists because Treasuries carry unique liquidity and safe-haven demand that box spreads don't fully replicate. By default, this calculator ignores that premium for a cleaner apples-to-apples tax comparison, but you can toggle it on below to see the combined effect.

SGOV distributions are exempt from state income tax because they're Treasury interest. BOXX capital gains are subject to state tax. This narrows BOXX's advantage significantly in high-tax states, and in some cases flips the outcome entirely. The breakeven state tax rate below shows exactly where that crossover happens for your inputs.

To state what may be obvious at this point, notice how BOXX's advantage widens as one's federal tax rate increases, but worsens as state tax rate increases, as again T-bills are exempt from state taxes. BOXX also obviously becomes increasingly advantageous as yield and holding period increase, as they allow for a higher total return and thus a wider gap.

Keep in mind the calculator below is showing projected hypothetical returns, not guaranteed or realized outcomes. It's also not tax advice; consult your tax professional.

BOXX After-Tax Return Calculator

Investment Amount ($)

T-Bill Yield (%)

Federal Income Tax Rate (%)

Federal LTCG Rate (%)

State Income Tax Rate (%)

Holding Period (Years)

Include BOXX box spread premium over T-bills +0.25% — Research finds box spreads have historically yielded ~0.25–0.35% above T-bill rates. Toggle on to add 0.25% to BOXX’s effective yield. This widens BOXX’s advantage but introduces some uncertainty, as the premium is not guaranteed and fluctuates over time.

BOXX After-Tax

—

— eff. annual yield

SGOV After-Tax

—

— eff. annual yield

BOXX Advantage

—

over the period

Breakeven State Tax Rate

—

state tax where advantage = $0

After-Tax Portfolio Value Over Time

BOXX (after-tax if sold)

BOXX (pre-tax accrual)

SGOV (after-tax)

Methodology: SGOV expense ratio: 0.09%. BOXX expense ratio: 0.19%. SGOV after-tax return = (yield − 0.09%) × (1 − federal ordinary rate), compounded monthly to reflect SGOV’s monthly distribution schedule. State tax exemption applied to SGOV (Treasury interest). BOXX grows pre-tax at (yield − 0.19%); gain taxed at LTCG + state rate if held ≥1 year, otherwise at ordinary income + state rate. The dashed line shows BOXX’s pre-tax accumulation. The gap above the solid blue line represents the deferred tax liability still owed. NIIT (3.8%) not included by default. Add it to your LTCG rate if your MAGI exceeds $200K/$250K. Important caveat: BOXX’s LTCG treatment is its intended structure, but the IRS continues to scrutinize box spread strategies. Consult a CPA before relying on this for planning. The chart displays hypothetical projected returns based on your inputs, not actual historical fund performance.

OptimizedPortfolio.com

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