A display may have upper and lower display layers. A layer of liquid crystal material may be interposed between the upper and lower display layers. The display layers may have substrates. A thin-film transistor layer may have a layer of thin-film transistor structures on a substrate such as a clear glass layer. A planarization layer may be formed on the thin-film transistor structures. A transparent conductive layer may be formed on the planarization layer The display may have a dielectric layer on the transparent conductive layer. Pixels may be formed in the display layers. The pixels may include pixel electrodes having fingers. The fingers may be formed on the dielectric layer. Trenches in the dielectric layer may be formed between the fingers. The trenches may extend to the transparent conductive layer or may be formed only partway into the dielectric layer.