Treasury Bill Calculator
Calculate T-bill discount yield, investment yield, and purchase price from face value. Enter values for instant results with step-by-step formulas.
Formula
Purchase Price = Face Value x (1 - Discount Rate x Days / 360)
T-bills are sold at a discount to face value. The bank discount method uses a 360-day year. Bond equivalent yield converts to a 365-day year using purchase price as the base. The effective annual yield accounts for compounding if you reinvest at the same rate.
Worked Examples
Example 1: Standard 13-Week T-Bill Purchase
Problem: You want to buy a $10,000 face value 13-week (91-day) T-bill at a discount rate of 5.25%. What is your purchase price and return?
Solution: Purchase Price = Face Value x (1 - Discount Rate x Days/360)\nPurchase Price = $10,000 x (1 - 0.0525 x 91/360)\nPurchase Price = $10,000 x (1 - 0.01327) = $10,000 x 0.98673\nPurchase Price = $9,867.29\nProfit = $10,000 - $9,867.29 = $132.71\nBond Equivalent Yield = ($132.71/$9,867.29) x (365/91) = 5.394%\nEffective Annual Yield = (1 + 0.01345)^4.011 - 1 = 5.473%
Result: Purchase Price: $9,867.29 | Profit: $132.71 | BEY: 5.394%
Example 2: Comparing T-Bill to High-Yield Savings
Problem: A 26-week T-bill offers 5.25% discount rate. Your savings account pays 4.75% APY. State tax rate is 6%. Which earns more?
Solution: T-bill purchase price = $10,000 x (1 - 0.0525 x 182/360) = $9,734.58\nT-bill profit = $265.42\nT-bill BEY = ($265.42/$9,734.58) x (365/182) = 5.471%\nT-bill state-tax-adjusted = 5.471% / (1 - 0.06) = 5.820% equivalent\nSavings account = 4.75% (subject to state tax)\nSavings after-state-tax = 4.75% x (1 - 0.06) = 4.465%\nT-bill advantage = 5.471% - 4.465% = 1.006% on after-tax basis
Result: T-Bill effective: 5.82% state-adjusted | Savings: 4.47% after state tax | T-Bill wins by 1.35%
Frequently Asked Questions
What are the different T-bill maturities available?
The U.S. Treasury issues T-bills in several standard maturities. The most common are 4-week (28 days), 8-week (56 days), 13-week (91 days), 17-week (119 days), 26-week (182 days), and 52-week (364 days) bills. The Treasury holds weekly auctions for 4-week, 8-week, 13-week, and 26-week bills, while 52-week bills are auctioned every four weeks. There are also occasional cash management bills issued with non-standard maturities to manage the government short-term borrowing needs. The 13-week and 26-week bills are the most actively traded and widely referenced in financial markets.
How do I buy Treasury bills?
There are two main ways to purchase T-bills. First, you can buy directly from the U.S. Treasury through TreasuryDirect.gov with no fees or commissions. You can participate in weekly auctions by submitting a noncompetitive bid, which guarantees you will receive the bills at the average auction price. The minimum purchase is $100. Second, you can buy T-bills through most brokerage firms like Fidelity, Schwab, or Vanguard, either at auction or on the secondary market. Brokerages may charge small commissions but offer more flexibility and easier integration with your investment portfolio. Many money market funds also invest primarily in T-bills.
How are Treasury bills taxed?
T-bill interest income is subject to federal income tax but exempt from state and local income taxes, which can provide meaningful savings for investors in high-tax states like California or New York. The interest is the difference between your purchase price and the face value received at maturity. This income is reported on your 1099-INT form. You can choose to report the interest in the year the T-bill matures or the year you receive payment. For T-bills purchased at auction, the interest is considered original issue discount (OID). There is no capital gains treatment available for T-bills held to maturity, as all returns are classified as ordinary interest income.
What is a T-bill ladder and how do I build one?
A T-bill ladder is a strategy where you spread your investment across T-bills with staggered maturity dates, so a portion matures regularly. For example, with $40,000, you could buy $10,000 in 4-week, 13-week, 26-week, and 52-week T-bills. As each bill matures, you reinvest in the longest maturity in your ladder. This approach provides regular liquidity (some bills are always maturing soon), reduces reinvestment risk (you are not locking everything in at one rate), and captures the full yield curve. Many investors ladder 13-week T-bills by buying $2,500 each week, creating a rolling portfolio where some amount matures every single week.
What formula does Treasury Bill Calculator use?
The formula used is described in the Formula section on this page. It is based on widely accepted standards in the relevant field. If you need a specific reference or citation, the References section provides links to authoritative sources.
Is Treasury Bill Calculator free to use?
Yes, completely free with no sign-up required. All calculators on NovaCalculator are free to use without registration, subscription, or payment.