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What Are Treasury Bills and Why Use a Treasury Bill Calculator?
Treasury bills, commonly called T-bills, are short-term debt securities issued by the U.S. Treasury with maturities of one year or less. Unlike Treasury notes and bonds, T-bills do not pay periodic interest. Instead, they are sold at a discount to face value, and the investor receives the full face value at maturity. The difference between the purchase price and face value is the investor's return. A Treasury bill calculator translates that dollar return into the three standard annualized yield measures, discount yield, investment yield, and effective annual yield; so you can compare T-bills cleanly against CDs, high-yield savings accounts, and other short-duration fixed-income alternatives.
T-bills have become especially attractive as a cash-management tool since 2022, when the Federal Reserve's rate-hiking cycle pushed short-term Treasury yields above 5% for the first time in over a decade. Combined with their state-tax exemption and zero default risk, T-bills now offer institutional-grade returns to individual investors with no credit risk and minimal complexity. Use this T-bill calculator to model the exact yield and dollar return for any purchase before bidding at the next auction at TreasuryDirect.gov, the official portal for buying Treasuries directly from the U.S. government.
T-Bill Discount Yield vs. Investment Yield Explained
Every Treasury bill has two quoted yields, and confusing them is the most common error new investors make. The discount yield (also called the bank discount rate) is the rate reported at Treasury auctions and in financial newspapers. It uses a 360-day year and divides by the face value of the bill rather than the purchase price. Formula:
Discount Yield = (Face − Price) / Face × (360 / days) × 100
The investment yield, also called the bond-equivalent yield (BEY), is the apples-to-apples annualized return on the cash you actually invested. It uses a 365-day year and divides by the price you paid. Formula:
Investment Yield (BEY) = (Face − Price) / Price × (365 / days) × 100
For a 13-week T-bill bought at $980 with a $1,000 face value, the discount yield is roughly 7.91% while the investment yield is approximately 8.18%. Always use the investment yield when comparing a T-bill to a CD, a bond, or a savings account, because those products quote rates on a 365-day basis. For a complete bond-yield analysis, including yield-to-maturity for coupon-bearing securities, see our bond yield calculator.
T-Bill Terms: 4, 8, 13, 17, 26, and 52 Weeks
The U.S. Treasury currently auctions six standard T-bill maturities. The 4-week and 8-week bills are auctioned every Tuesday and settle on the following Thursday. They are the closest substitute for an overnight money-market fund and are widely used by corporate treasurers for ultra-short cash. The 13-week and 26-week bills are also auctioned weekly (Mondays) and form the backbone of the short end of the yield curve; the 3-month T-bill yield is one of the most-watched short-term interest rates in global finance and serves as the risk-free rate in many academic models.
The 17-week bill, auctioned weekly on Wednesdays, is a relatively recent addition (introduced October 2022) that fills the gap between the 13-week and 26-week bills. The 52-week bill, auctioned every four weeks, is the longest T-bill maturity and is often used to lock in a known yield for a full year without committing to a multi-year note. The T-bill calculator uses the exact day count for each term (28, 56, 91, 119, 182, and 364 days respectively) so your yield calculations match what the Treasury reports in its auction results.
Choosing the right T-bill term is largely a function of when you need the cash and your view on short-term interest rates. If you think the Fed will cut rates soon, locking in today's 52-week yield is attractive. If you think rates will hold steady or rise, rolling shorter-dated bills (4- or 13-week) lets you capture each new auction's higher rate. Many investors build T-bill ladders to balance reinvestment risk with current income. For longer-duration Treasury exposure, our treasury bond calculator handles 2-, 5-, 10-, and 30-year Treasury notes and bonds with semiannual coupons.
T-Bill Tax Advantage: State-Tax-Exempt Income
One of the most underappreciated features of Treasury bills is their tax status. Interest on all U.S. Treasury securities, including T-bills, T-notes, T-bonds, TIPS, and Series I and EE savings bonds, is exempt from state and local income taxes under 31 U.S.C. § 3124. This is not a deduction or a credit; it is a complete exemption that applies regardless of your federal tax bracket or filing status. T-bill interest is still fully taxable at the federal level and is reported on IRS Form 1099-INT in the year the bill matures.
For investors in high-tax states, this exemption is worth real money. In California (top rate 13.3%) or New York City (combined state and local roughly 14%), a T-bill yielding 5.0% delivers the same after-tax income as a fully taxable CD yielding roughly 5.7 to 5.8%. In states with no income tax (Texas, Florida, Tennessee, Washington) the exemption is worthless, so T-bills compete with CDs and HYSAs purely on gross yield. To compute the exact tax-adjusted comparison for your situation, use our tax-equivalent yield calculator, which converts municipal-bond and Treasury yields into their fully taxable equivalents based on your state and federal brackets.
For background on how the SEC characterizes T-bills and other Treasury securities, see the official investor education page at Investor.gov, and Investopedia's reference article on T-bills at investopedia.com provides a thorough plain-English overview of the auction process and yield mechanics.
T-Bills vs. HYSA vs. CDs: How to Choose
The Treasury bill calculator's comparison table shows the side-by-side dollar return of a T-bill against a high-yield savings account and a CD at the same term. The three instruments serve different roles and the right choice depends on your priorities across yield, liquidity, tax status, and credit risk.
Treasury bills offer the highest credit quality available (backed by the full faith and credit of the U.S. government), state-tax exemption, and a fixed locked-in yield for the term you buy. The trade-off is that your cash is tied up until maturity, if you sell on the secondary market early, you bear price risk if rates have risen. For predictable cash needs at known dates, T-bills are the gold standard.
High-yield savings accounts offer complete liquidity and competitive rates when short-term rates are high. The disadvantage is rate risk: when the Fed cuts rates, HYSA rates drop quickly, sometimes within days. HYSAs are also fully taxable at the federal, state, and local levels, putting them at a structural disadvantage to T-bills in high-tax states.
Certificates of deposit (CDs)are issued by banks and are FDIC-insured up to $250,000 per depositor, per institution. CD rates may be slightly higher than T-bill yields gross, but CDs typically carry early-withdrawal penalties (often 90 to 180 days of interest) and are fully taxable, eroding their advantage. CDs are best for investors in low- or no-income-tax states who want a known maturity date and don't mind the liquidity trade-off. The Treasury bill calculator shows the after-fee, before- tax return for each option; layer your marginal tax rate on top to see the after-tax picture. Explore more fixed-income and savings tools in our investing tools hub to build a complete picture of your short-duration cash strategy.