Treasury bills are short-term U.S. government securities that mature in one year or less. You can buy them directly from the Treasury or through a bank, broker or dealer.
Unlike Treasury notes and bonds, Treasury bills do not make regular interest payments. Instead, investors generally buy them below face value and receive the full face value at maturity.
What are Treasury bills?
Treasury bills, also called T-bills, are marketable securities issued by the U.S. Department of the Treasury to help finance the federal government.
They have short maturities, including:
- 4 weeks;
- 6 weeks;
- 8 weeks;
- 13 weeks;
- 17 weeks;
- 26 weeks;
- 52 weeks.
The Treasury generally auctions the shorter-term bills weekly, while 52-week bills are generally auctioned every four weeks.
The minimum purchase is $100, with additional purchases in $100 increments.
How do Treasury bills work?
The basic structure is straightforward.
You purchase a bill for less than its face value, hold it until maturity and receive the face value when the term ends. The difference between what you paid and what you receive represents the interest earned.
For example, suppose a T-bill has a $1,000 face value and you pay $980 for it.
At maturity:
Purchase price: $980
Amount received: $1,000
Interest earned: $20
The actual purchase price depends on the rate established at auction.
Treasury bills can also be issued at par rather than at a discount in some circumstances.
How much can you earn with Treasury bills?
Your return depends on the purchase price, face value and time until maturity.
As a current reference, U.S. Treasury data showed the following coupon-equivalent rates on August 24, 2026:
- 4-week bill: 3.70%
- 8-week bill: 3.73%
- 13-week bill: 3.81%
- 17-week bill: 3.85%
- 26-week bill: 3.93%
- 52-week bill: 4.03%
These are annualized rates, so they do not represent the amount you will earn over the full term of a four-, 13- or 26-week investment. Actual earnings depend on the bill’s term and purchase price.
Example: $10,000 in a T-bill
Suppose a 26-week Treasury bill offers an annualized coupon-equivalent rate of about 3.93%.
A rough six-month estimate would be:
$10,000 × 3.93% × 26 ÷ 52 ≈ $196.50
So an investment of $10,000 could generate roughly $196.50 over 26 weeks at that annualized rate.
This is an illustration, not a guaranteed future return. The actual purchase price and auction result determine the return on a specific bill.
How are Treasury bill rates determined?
Treasury bills are sold through public auctions.
Investors can submit either:
Noncompetitive bids
You agree to accept the rate determined at the auction.
In TreasuryDirect, this type of bid generally allows individual investors to receive the security they requested, assuming they meet the applicable requirements.
Competitive bids
You specify the minimum rate you are willing to accept.
Depending on the auction result, your bid can be accepted in full, accepted partially or rejected. Competitive bids must go through a bank, broker or dealer rather than directly through TreasuryDirect.
How do you buy Treasury bills?
You have two main routes.
TreasuryDirect
You can buy T-bills directly from the U.S. Treasury through a TreasuryDirect account.
TreasuryDirect allows noncompetitive bids only. The minimum purchase is $100, and purchases can increase in $100 increments.
Bank or brokerage account
You can also purchase Treasury bills through a bank, broker or dealer.
This route can provide access to both auctions and the secondary market, depending on the institution.
Before purchasing, check whether the provider charges commissions, transaction fees or other costs.
What happens when a Treasury bill matures?
At maturity, the Treasury pays the bill’s face value.
If you bought a $10,000 bill for $9,800, for example, you would receive $10,000 at maturity.
You can then use the proceeds elsewhere or reinvest them into another Treasury bill.
TreasuryDirect also allows investors to schedule reinvestments, using the proceeds from a maturing bill to purchase another bill of the same type.
Can you sell Treasury bills before maturity?
Yes. Treasury bills are marketable securities, so you can sell them before maturity through a bank, broker or dealer.
However, the price you receive can differ from what you originally paid.
If market rates rise after you purchase a bill, its market price can fall. If rates decline, its price can rise.
There is also a practical limitation for securities purchased through TreasuryDirect: newly purchased marketable securities generally must remain in the account for at least 45 calendar days before they can be transferred or sold. A bill that matures sooner than that cannot be sold from TreasuryDirect before maturity.
Are Treasury bills safe?
Treasury bills are backed by the full faith and credit of the U.S. government. That makes them different from corporate debt, where repayment depends on the issuing company’s financial condition.
However, “safe” does not mean that every possible outcome is identical.
If you hold a T-bill until maturity, the Treasury pays its face value. If you sell before maturity, the market price can change.
You also face inflation risk because the return may not keep pace with increases in the cost of living.
How are Treasury bills taxed?
Interest from Treasury bills is subject to federal income tax.
However, it is exempt from state and local income taxes.
This can make T-bills particularly relevant for investors who live in states or localities with income taxes.
The federal tax treatment depends on your individual tax situation, so the amount you ultimately keep after taxes can differ from the quoted return.
Treasury bills vs. Treasury notes and bonds
The main difference is maturity.
| Security | Typical maturity | Interest structure |
|---|---|---|
| Treasury bills | 1 year or less | Sold at a discount or par; interest paid at maturity |
| Treasury notes | 2 to 10 years | Fixed interest paid every six months |
| Treasury bonds | More than 10 years | Fixed interest paid every six months |
Treasury bills therefore tend to suit investors looking at shorter time horizons, while notes and bonds provide longer-term exposure to U.S. government debt.
What are the advantages of Treasury bills?
T-bills have several features that can make them useful in a portfolio.
Short maturities
You do not need to commit your money for many years. Terms range from four weeks to 52 weeks.
Government backing
They are obligations of the U.S. government and are backed by its full faith and credit.
Low minimum investment
You can start with $100 through TreasuryDirect.
Tax advantage
The interest is exempt from state and local income taxes, although federal tax applies.
Flexible maturities
The range of available terms allows investors to match a bill to a specific time horizon.
What are the risks of Treasury bills?
Although T-bills carry relatively low credit risk, they are not completely risk-free investments.
The main considerations include:
- Inflation: your purchasing power can decline if inflation exceeds your return.
- Interest rates: selling before maturity can result in a gain or loss because market prices change.
- Reinvestment risk: when a bill matures, a comparable new bill may offer a different rate.
- Opportunity cost: locking money into a bill can prevent you from using it elsewhere during the term.
For many investors, the biggest practical distinction is whether they plan to hold until maturity or sell early.
Are Treasury bills a good investment?
Treasury bills can make sense when you want a short-term investment with a defined maturity and relatively low credit risk.
They may be useful for:
- holding cash temporarily;
- managing a short-term savings goal;
- diversifying a portfolio;
- generating income from cash that would otherwise remain uninvested;
- creating a ladder of different maturities.
They may be less suitable if you need immediate access to your money or want substantial long-term growth from your investment.
What is a Treasury bill ladder?
A T-bill ladder involves buying bills with different maturity dates instead of investing everything in a single bill.
For example, an investor could divide money among bills maturing at different intervals.
As each bill matures, the investor can use the money or reinvest it into another bill.
This approach can provide more regular access to cash while reducing the risk of committing the entire investment at one interest rate.
How to choose the right Treasury bill term
The best maturity depends on when you expect to need the money.
4 to 8 weeks
These shorter terms can suit investors who want a relatively brief commitment and expect to use the money soon.
13 to 26 weeks
These maturities can work for medium-term cash needs when you can leave the money invested for several months.
52 weeks
A one-year bill can suit investors who do not expect to need the funds for roughly a year and want to lock in the rate available at purchase.
The key is to match the maturity with your financial timeline rather than choosing a bill based only on its quoted annualized yield.
What should you check before buying?
Before purchasing Treasury bills, look at:
- maturity date;
- auction rate or purchase price;
- annualized yield;
- amount you will invest;
- expected amount at maturity;
- federal tax implications;
- whether you might need the money before maturity.
Most importantly, distinguish between the annualized rate and the actual dollar return for the specific term.
A 4% annualized rate does not mean that a four-week bill will earn 4% on your money in four weeks.
Frequently asked questions
Can I buy Treasury bills with $100?
Yes. The minimum purchase is $100, with additional purchases in $100 increments.
Do Treasury bills pay monthly interest?
No. T-bills generally do not make periodic interest payments. You receive the face value at maturity, with the difference between the purchase price and face value representing the interest.
Can I lose money on a Treasury bill?
If you hold the bill until maturity, the Treasury pays its face value. If you sell before maturity, however, the market price may be higher or lower than what you paid.
Are Treasury bills tax-free?
Not completely. T-bill interest is subject to federal income tax but is exempt from state and local income taxes.
Can I buy Treasury bills directly from the government?
Yes. TreasuryDirect allows individuals to purchase T-bills directly through noncompetitive bidding. You can also buy them through banks, brokers and dealers.
How often are Treasury bills auctioned?
The 4-, 6-, 8-, 13-, 17- and 26-week bills are generally auctioned weekly, while 52-week bills are auctioned every four weeks.
Can I reinvest a Treasury bill when it matures?
Yes. TreasuryDirect allows investors to schedule reinvestments so proceeds from a maturing bill can be used to purchase another bill of the same type.
