I was thinking about that tax hit, too. One move people often make is shifting some of that cash into municipal bonds. Because the income is usually tax-exempt, your "after-tax" return often beats that of a regular savings account.

It’s definitely a trade-off, though; you lose some of that instant liquidity, and the price can fluctuate. A good strategy is to split your funds: use cash for immediate needs and municipal bonds for long-term savings.

Tax-exempt municipal bonds and US Treasury bonds are good options for safe income. Municipal bonds offer tax-free interest, and Treasury bonds are taxable but exempt from state taxes. They offer consistent income without touching your principal.