CNBC writes "Investors piled cash into money market mutual funds in 2023 and now could see a higher tax bill." They explain, "If you funneled cash into money market mutual funds in 2023 amid rising interest rates, you may have a surprise tax bill in April, experts say. Investors and institutions have piled $​5.​84 trillion into money market mutual funds, as of Nov. 29, according to the Investment Company Institute <​b:>​v_, and many funds are paying well over 5%. '​With pennies earned in 2022 on cash assets, the tax bill was negligible,' said certified financial planner `​Robert Schultz, senior partner at NWF Advisory Group in Encino, California. 'At 5% rates, there will be much higher bills, which will catch many off guard.'" The article tells us, "With yields closely tied to the federal funds rate, money market funds -- different than money market deposit accounts -- are mutual funds that typically invest in shorter-​term, lower-​credit-​risk debt, such as Treasury bills. Many investors are stockpiling money into these funds due to '​fear in the stock market' and many are nervous to spend cash, according to CFP Colin Day, an enrolled agent at Correct Capital in St Louis." CNBC adds, "​Typically, money market funds pay dividends monthly, and the earnings made in 2023 '​could be significant,' said Day. '​But unfortunately, this is before taxes.' Rather than more favorable capital gains rates, you'​ll owe regular income taxes on money market fund earnings, with a top bracket of 37%. By comparison, the top long-​term capital gains rate is 20%."

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