Demand Deposit Securities of the State and Local Government Series (SLGS); Average Marginal Tax Rate and Treasury Administrative Cost

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This notice is being published to provide the information necessary to apply the interest rate formula for Demand Deposit certificates of indebtedness--State and Local Government Series (SLGS) (31 CFR part 344, subpart C). In the final rule governing securities of the State and Local Government Series that appeared in the Federal Register of June 30, 2005, (70 FR 37904), provision was made to provide by notice the information necessary to apply the interest rate formula to the Demand Deposit certificates of indebtedness, i.e., the average yield for three-month Treasury bills at the most recent auction, multiplied by one minus the estimated average marginal tax rate (1-MTR) of purchasers of tax-exempt bonds, less the Treasury administrative cost. The factor necessary to convert the interest rate to a tax-exempt equivalent (1--the estimated average marginal tax rate of purchasers of tax-exempt bonds) is 1-.24 or .76. The Treasury administrative cost is one basis point.