How a Treasury Bill Works
A Treasury bill is a short-term loan to the federal government. There's no interest payment along the way: you buy the bill for less than its face value, and at maturity the Treasury pays you the full face value. A $10,000 26-week bill at a 4.21% discount rate costs $9,787.16 and pays $212.84 more than that 182 days later.
Bills come in 4-, 6-, 8-, 13-, 17-, 26- and 52-week terms. You can buy them from TreasuryDirect with as little as $100, or through a brokerage account.
Treasury Bill Rates on September 25, 2026
| Term | Discount rate | Price per $100 | Investment rate | Yield if rolled over |
|---|---|---|---|---|
| 4 weeks | 3.90% | 99.6967 | 3.97% | 4.04% |
| 6 weeks | 3.94% | 99.5403 | 4.01% | 4.09% |
| 8 weeks | 4.02% | 99.3747 | 4.10% | 4.17% |
| 13 weeks | 4.08% | 98.9687 | 4.18% | 4.25% |
| 17 weeks | 4.14% | 98.6315 | 4.26% | 4.32% |
| 26 weeks | 4.21% | 97.8716 | 4.36% | 4.41% |
| 52 weeks | 4.28% | 95.6724 | 4.49% | 4.54% |
Discount rates are Treasury's daily rates. The investment rate and rolled-over yield are calculated from them with Treasury's formulas, so they can differ by a hundredth of a point from Treasury's own published figures, which use each bill's exact days to maturity.
Discount Rate vs. Investment Rate
Auction results quote two rates. The discount rate is the money-market convention: the discount as a share of face value, over a 360-day year. The investment rate measures the discount against what you actually paid, over a 365-day year, so it's always higher. For the 26-week bill above, the discount rate is 4.21% and the investment rate is 4.36%. Compare the investment rate, or the rolled-over yield, with CD and savings rates.
The State Tax Advantage
T-bill interest is taxed federally but not by states or cities. CD and savings interest is taxed by both. So in a state with a 6% income tax, a CD would need 4.78% APY to leave you with as much as the 26-week bill after tax, compared with the bill's 4.41% rolled-over yield. On $10,000, the bill skips $12.77 of state tax in half a year.
For comparison, the best 1-year CDs paid 4.30% on September 24, 2026, and top high-yield savings accounts about 4.00%. In a state with no income tax, the rates can be compared directly. The CD calculator and high-yield savings calculator show the other side of the comparison.
Frequently Asked Questions
How is Treasury bill interest calculated?
You buy the bill below its face value and get the full face value at maturity; the difference is your interest. The price comes from the discount rate: price per $100 = 100 × (1 − rate × days ÷ 360). A $10,000 26-week bill at 4.21% costs $9,787.16 and pays $212.84 of interest.
What is the difference between the discount rate and the investment rate?
The discount rate is figured on the face value over a 360-day year, which understates what you earn. The investment rate (also called the coupon-equivalent yield) is figured on the price you actually pay over a 365-day year, so it is higher and closer to the APY on a CD or savings account. Treasury publishes both for every auction.
Are Treasury bills taxed?
The interest is subject to federal income tax but exempt from state and local income tax. It is reported on Form 1099-INT for the year the bill matures, even if the payment itself lands in the next year because of a holiday or weekend.
How do I buy Treasury bills?
Directly from the Treasury at TreasuryDirect.gov, with a $100 minimum and $100 increments, or through a brokerage account. Bills are sold at auction in 4-, 6-, 8-, 13-, 17-, 26- and 52-week terms.
Are T-bills better than a CD?
It depends mostly on your state tax rate. A bill's interest skips state income tax and a CD's does not, so in a state with a high income tax a bill can come out ahead even at a lower headline rate. The calculator shows the APY a CD would need to match the bill after tax. In a state with no income tax, compare the rates directly; the best 1-year CDs paid 4.30% on September 24, 2026.
What does "yield if rolled over for a year" mean?
A 13-week bill earns its interest over 91 days. If you bought another bill at the same price each time one matured, the returns would compound over the year. That annualized figure is directly comparable to the APY on a CD or savings account.