FDLXX vs. SPAXX: Which Fidelity Money Market Fund Keeps More After State Tax?

Yields move. Both figures here are Fidelity’s published month-end 7-day yields for August 31, 2026, so the two funds are compared on the same day and the same basis. Money market funds have no licensed daily feed, so the calculator starts from those snapshots. The government-securities percentages are for tax year 2025 and are republished every January.

The short version

SPAXX is where Fidelity puts your cash. FDLXX is the same kind of fund, at the same 0.42% expense ratio and a slightly higher yield, holding Treasuries only instead of Treasuries plus repurchase agreements. That one difference decides the state tax. For 2025 Fidelity reported 98.67% of FDLXX’s income as Treasury interest and marked it as passing the California, Connecticut and New York quarterly test; SPAXX reported 50.90% and missed the test, so those three states tax all of it. For one modeled California saver at a 32% federal and 9.3% state rate, FDLXX came out about $173 a year ahead on $50,000; in a 5% state about $60; in a state with no income tax about $20, which is just the yield gap. Both funds hold a $1.00 share price, so switching realizes nothing and costs nothing, and Fidelity draws on FDLXX automatically to cover purchases. The one catch is that new deposits still land in SPAXX.

Most Fidelity customers never choose SPAXX. It is the default core position, every deposit lands in it, and it works well enough that there is no obvious reason to look further. This guide is about the one reason to look further, which is that a fund sitting one menu away keeps more of the same interest after state tax, and the switch has no cost worth naming.

What differs

SPAXX is the Fidelity Government Money Market Fund. It holds Treasury securities and repurchase agreements collateralized by them, which is what makes it a government fund rather than a Treasury fund. FDLXX is the Fidelity Treasury Only Money Market Fund and holds Treasuries alone. Both charge 0.42%, both keep a $1.00 share price, and both pay monthly. On August 31, 2026 their 7-day yields were 3.33% and 3.39%.¹

The repurchase agreements are why the two funds diverge on tax. Interest on Treasury obligations is exempt from state income tax; interest earned through a repurchase agreement generally is not, even when the collateral is a Treasury. A fund’s exempt share is therefore roughly its Treasury share, and Fidelity publishes the number each January.

The state-tax gap

For 2025, 98.67% of FDLXX’s income and 50.90% of SPAXX’s came from US government securities.² In most states with an income tax that is the whole story: nearly all of FDLXX’s interest escapes state tax, and about half of SPAXX’s does.

California, Connecticut and New York add a second test. A fund must have held at least 50% of its assets in government obligations at the end of every quarter, or none of its income is exempt for residents of those states.³ Fidelity marks FDLXX as passing and SPAXX as missing that test for 2025.² An income figure can sit above 50% for the year while the holdings dip below it at a quarter end, which is how SPAXX fails despite its 50.90%. The result is that a Californian or New Yorker pays state tax on every dollar SPAXX earns and on about 1.3% of what FDLXX earns.

In dollars, for one modeled saver at a 32% federal and 9.3% California rate with $50,000: SPAXX’s 3.33% is worth about 1.95% after tax and FDLXX’s 3.39% about 2.30%, a gap of roughly $173 a year. The same saver in a 5% state that has no quarterly test keeps half of SPAXX’s interest exempt and the gap shrinks to about $60. With no state income tax the exemption is worth nothing and the gap is the six basis points of yield, about $20.

Run your own numbers

Pick your state and account type. The calculator carries each fund’s threshold status, so choosing California or New York zeroes SPAXX’s exemption and leaves FDLXX’s intact, and it reports the balance at which the gap reaches $100 a year.

Switching costs nothing

Two things usually make a cash switch not worth doing: a tax bill on the sale and a loss of convenience. Neither applies here. Both funds hold a $1.00 share price, so there is no gain to realize when you move from one to the other. And FDLXX behaves almost like a core position once you own it: Fidelity’s settlement order draws on it automatically to cover a purchase or a debit once the core itself is exhausted.⁴

The one real difference is that FDLXX cannot be set as the core, so every new deposit still lands in SPAXX until you buy FDLXX with it. That is a recurring chore rather than a cost, and it is the only argument SPAXX has left in a taxing state. The related question of which core to pick when you do have to pick one is covered in the core position guide.

When it does not matter

In a state with no income tax the only difference is six basis points of yield, about $20 a year on $50,000, which is not worth a recurring chore. Inside an IRA or 401(k) the state-tax question never arises and the same applies. And below roughly $29,000 at the modeled California rates the gap is under $100 a year, so a small balance can stay put without much loss.

If the goal is yield rather than money market mechanics, neither fund is the top answer at Fidelity. A Treasury bill ETF yielded more at the same snapshot because its expense ratio is a third of these funds’, at the cost of a settlement day; that comparison is SPAXX vs. SGOV. FDLXX is the answer for cash that should stay a money market fund.

Key takeaways

Same fee, same $1.00 price, different holdings. FDLXX holds Treasuries only; SPAXX adds repurchase agreements, whose interest states generally tax.
SPAXX gets no state exemption in CA, CT or NY. It missed the 2025 quarterly 50% holdings test; FDLXX passed with 98.67% of income from Treasuries.
For one modeled California saver, about $173 a year on $50,000, roughly $60 in a 5% state, and about $20 with no state tax.
Switching realizes nothing. Both funds hold $1.00, and Fidelity auto-liquidates FDLXX to cover purchases.
Deposits still land in SPAXX. FDLXX cannot be the core, so buying it is a recurring step.

How Summitward helps

Cash tracker

Enter your Fidelity cash positions and see what each yields after your own federal and state rates, including the CA/CT/NY threshold rule.

Open the cash tracker

Frequently asked questions

Is FDLXX better than SPAXX?

After state tax, yes, in any state with an income tax, and by the most in California, Connecticut and New York, where SPAXX’s exemption is zero. For one modeled California saver the gap was about $173 a year on $50,000 at August 2026 yields. With no state income tax the difference is six basis points of yield.

Can I make FDLXX my core position?

No. Fidelity’s core menu does not include it. You buy it as a regular position, and Fidelity will redeem it automatically to cover debits once your core is used up, which gives you most of a core’s convenience.

Is FDLXX state tax free?

Nearly. For 2025, 98.67% of its income was Treasury interest, which states do not tax, and it met the quarterly holdings test that California, Connecticut and New York require, so the exemption applies there in full. The remaining 1.33% is taxable.

Does moving from SPAXX to FDLXX trigger a tax bill?

No. Both funds hold a stable $1.00 share price, so a sale of SPAXX realizes no gain. The interest each fund has already paid you is taxable as usual, but the switch itself is not an event.

What about FZFXX, the Treasury money market fund?

FZFXX is a core option and holds Treasuries with repurchase agreements as well. Fidelity reported 61.52% of its 2025 income as government securities and marked it as missing the CA/CT/NY test, so it sits between the two funds here in most states and alongside SPAXX in those three.²

Related guides

VUSXX vs. VMFXX: the Vanguard version of this decision, where both funds keep their exemption.
Best Fidelity Core Position: SPAXX against FZFXX, FCASH and the FDIC sweep, for when a core has to be chosen.
SPAXX vs. SGOV: the higher-yielding ETF route and its settlement trade-off.
SPAXX vs. HYSA: whether cash should leave Fidelity for a bank at all.
FDLXX vs. SPAXX at a glance: the compact version with the table.

Sources

Fidelity Institutional, “Fidelity Money Market Funds: Month-End Yields,” as of August 31, 2026 (SPAXX 3.33%, FDLXX 3.39%; both funds’ expense ratio 0.42%). institutional.fidelity.com
Fidelity, “2025 Percentage of Income from U.S. Government Securities,” supplemental letter (FDLXX 98.67%, SPAXX 50.90%, FZFXX 61.52%; SPAXX and FZFXX marked as not meeting the California, Connecticut and New York minimum). fidelity.com (PDF)
Vanguard, “U.S. government obligations income information,” tax year 2025 (statement of the California, Connecticut and New York requirement that 50% of assets be in US government obligations at each quarter end). investor.vanguard.com
Fidelity, core position and settlement help (order in which cash and non-core money market positions are used to cover debits). fidelity.com

Author disclosure

I have a Fidelity account and hold cash in both a core position and a Treasury fund. I have no relationship with Fidelity. Every figure is Fidelity’s own on the date given, and the two yields are from the same month-end document so they are comparable. Nothing here is tax advice; the state treatment described depends on facts this article cannot see.