US Treasury Bill Calculator

Calculate the yield and return on a U.S. Treasury Bill (T-Bill).

T-Bill Details
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Days
Common terms are 4, 8, 13, 17, 26, and 52 weeks (28, 56, 91, 119, 182, 364 days).

About the Treasury Bill Calculator

U.S. Treasury Bills, or T-Bills, are short-term debt securities issued by the U.S. Department of the Treasury. They are sold at a discount to their face value and do not pay periodic interest. Your profit is the difference between the purchase price and the face value you receive when the bill matures. This calculator helps you determine the key return metrics for a T-Bill investment: the total profit, the discount yield, and the annualized investment rate.

Understanding the Calculations

There are two primary ways to express the return on a T-Bill:

  • Discount Yield: This is the standard convention for quoting T-Bill returns. It annualizes the discount as a percentage of the face value, using a 360-day year.
    $Formula: \left( \frac{\text{Face Value} - \text{Purchase Price}}{\text{Face Value}} \right) \times \frac{360}{\text{Days to Maturity}}$
  • Investment Rate (Coupon Equivalent Yield): This metric provides a more direct comparison to other interest-bearing investments like bonds or savings accounts. It annualizes the discount as a percentage of the purchase price, using a 365-day year.
    $Formula: \left( \frac{\text{Face Value} - \text{Purchase Price}}{\text{Purchase Price}} \right) \times \frac{365}{\text{Days to Maturity}}$

Frequently Asked Questions (FAQ)

What is a U.S. Treasury Bill (T-Bill)?

A T-Bill is a short-term debt instrument backed by the full faith and credit of the U.S. government, making it one of the safest investments in the world. They are issued with maturities of one year or less and are sold at a discount from their par value (face value). They don't pay interest; instead, the investor receives the full face value at maturity.

How are T-Bills taxed?

The interest income earned on Treasury Bills is subject to federal income tax but is exempt from all state and local income taxes. This can make them particularly attractive for investors in high-tax states.

How do I buy a T-Bill?

You can buy T-Bills in two ways: directly from the U.S. Treasury through the TreasuryDirect website (non-competitive bidding) or through a bank or broker (competitive or non-competitive bidding). Non-competitive bidding guarantees you will receive the T-Bill at the yield determined by the auction, while competitive bidding allows you to specify the yield you are willing to accept.