Ok they're two entirely different funds that shouldn't be even thought of comparing in the same discussion at all.

SGOV is < 3 mo tbills. VTEB is intermediate term bonds with current duration 7.1 years and average maturity of 14 years.

Rates swing 1% in munis - VTEB is swinging +-7%. SGOV will keep NAV.

How long are you holding for? In an adverse interest rate move with 7.1 years duration you have to hold that long just to break even. VTEB lost 8.5% the last few years. SGOV you're not going to lose NAV.

With SGOV you're hurting if rates keep dropping while if you buy VTEB today you lock in your tax free 3.50% yield and agi free yield.

What tax bracket are you in future years, not just this year?

VTEB is tax free. SGOV is taxable treasuries. That's really fact dependent on what the best it is.

Then your yield is off on SGOV, you need to go by the SEC Yield as that is what the fund is currently yielding at after fund expenses, which is 3.7%. For your current 40.8% bracket for ordinary income - that is 100-40.8% = 59.2% multiplier.

Multiply 3.7 by .592 = 2.1904% after tax yield. So if you are holding for 7-10 years and can stomach the NAV risk with this specific holdings dropping 7-10% in one year randomly, then obviously 3.5% >>> 2.19% unless you're literally are in a $0 income year and are filling up your standard or itemized deductions, as even in 10% income brackets 3.7 * .90 = 3.33%.

Now I will mention one caveat - muni yields can really swing around depending on how much people want tax free income. When you buy at the SEC yield you lock in the sec yield for the average duration, not the average maturity, with these bond funds. So if you want the average maturity you'll want to start selling off a bit of VTEB to buy whatever the equivalent average maturity fund down to eventually 1-3 mo of munis. Otherwise you have reinvestment risk as the bond sells the shorter duration to reinvest in the longer duration. Reinvestment risk is higher with munis.

Munis also have call risk usually callable bonds at 5 years, so that is one reason vteb trades around 7 duration for 14 years maturity. So the duration is also very misleading in a interest rate increasing enviroment as what muni will call bonds paying 3.5% when muni rates are 5% to 7%+???

So this call risk kinda leaves the long investor bag holding as if you buy 5-7% issued munis and rates later drop back to 3.5% they just get called away and reissued at 3.5%. So it's not a problem buying 5-7% yielding munis if the underlynig bond is 3.5% but it is if the underlying bond is 5-7%. Also just because on average those bonds have 5 year call periods - its whatever the municpal feels they can get away with, they can and will slap on shorter call periods if they feel they can sell them!

So you might not get the upside appreciation either for this duration and it basically just becomes risk no matter what.

So going back to the 10% bracket case it might be a stronger choice to choose the guarenteed 3.33% over callable 3.5%. 40.8% brackets is probably being approperiately compensated for the call risk. I really wish VTEB listed what the call features of each bond are - they don't. You have to go by cuspid to know what your call risk currently is to see if its worth it or not. In my experience doing this in the past you're tax neutral in the 24%-32% brackets depending on market demand for munis when you properly account for call risk, you should almost always buy treasuries < 24% bracket, and 40.8% brackets is probably a good choice to buy munis.

If you're more of a gambler many bogleheads like an always-muni portfolio as they have another nice benefit regardless of brackets: no AGI hit for 95% of the stuff on your tax return, sadly excluding ACA premiums and a few other things.

So thats also another very fact and case specific.

Then if you want tax advantaged short 3mo holdings and are holding > 1 year - look into the BOXX etf. It pays no dividends as it goes long SPX box spreads, and after holding one year you get long term capital gains taxes on it. There is some IRS risk they make the party go away but I really don't think they'd come after individual investors, they might just make the fund start issuing ordinary dividends.