T Bills Calculator
Treasury bills do not pay interest the way a savings account does. You buy them at a discount, the Treasury hands you the full face value at maturity, and the difference is your return. A $10,000 bill bought for $9,700 earns you $300, but what is that as an annual rate? The answer depends on which of three different yield conventions you use, and auction results are quoted in the one that makes the return look smallest.
The T-Bills Calculator below converts a purchase price into every yield that matters: the bank discount rate (the auction quote), the investment rate (the number comparable to a savings APY), and the effective APY. All math follows the U.S. Treasury’s own formulas in 31 CFR Part 356.
Quick Answer
How T-bills are priced: the bank-discount convention
Treasury bills are zero-coupon securities: no periodic interest payments, just a discount up front and face value at maturity. The Treasury quotes them with a discount rate that divides the discount by the face value and annualizes over a 360-day banking year. That convention is a historical artifact of money markets, and it systematically understates your return two ways: the denominator is the larger face value, and the year is five days short.
Investment rate (bond equivalent yield) = (discount / purchase price) x (365 / days)
Effective APY = (face value / purchase price)365/days – 1
The investment rate fixes both distortions: it measures your return against what you actually paid, over a real 365-day year. That makes it directly comparable to a savings account APY or a CD rate, which is the comparison most buyers actually want. The effective APY goes one step further and assumes you reinvest each maturity into a similar bill for a full year.
Worked example, checked against this exact tool
Using the pre-filled defaults ($10,000 face, $9,700 price, 182 days):
| Measure | Result | What it tells you |
|---|---|---|
| Discount (interest) | $300.00 | Your dollar profit at maturity |
| Discount rate | 5.9341% | The auction quote convention |
| Investment rate | 6.2026% | True yield, comparable to savings APY |
| Holding-period return | 3.0928% | Actual gain over the 182 days |
| Effective APY | 6.2990% | If rolled over for a full year |
Notice the quoted 5.93% understates the 6.20% you actually earn by more than a quarter point. On a $100,000 purchase that convention gap is worth about $130 in perceived yield over six months. Small per bill, but it is exactly the kind of thing that should not be left to mental math.
The three yields, and why they differ
Three numbers describe the same bill, and confusing them is the most common T-bill mistake. The discount rate is a quoting convention: discount divided by face value, 360-day year. The investment rate (also called coupon-equivalent or bond-equivalent yield) is your economic return: discount divided by price, 365-day year. The effective APY adds compounding by assuming reinvestment. For comparing a bill against a high-yield savings account or a CD, the investment rate is the right number; the discount rate will always make the bill look slightly worse than it is.
Auction terms at a glance
The Treasury auctions bills in standard maturities. Minimum purchase is $100 at TreasuryDirect, in $100 increments, backed by the full faith and credit of the U.S. government.
| Term | Days | Typical use |
|---|---|---|
| 4-week | 28 | Cash you need next month |
| 8-week | 56 | Short-term parking |
| 13-week | 91 | Quarterly cash planning |
| 17-week | 119 | Between quarterly and half-year |
| 26-week | 182 | The most popular rung for bill ladders |
| 52-week | 364 | Maximum T-bill term before notes begin |
What competing calculators miss
Only the discount rate. Several top-ranking T-bill tools compute the auction quote and stop, leaving you to guess the comparable yield yourself. Ours shows all three yields side by side because the quote is the least useful of the three for decision-making.
The 360 vs 365 explanation. Competitors state the formulas without saying why two day-counts exist. The 360-day banking year is a money-market convention, not a calendar; knowing that is what stops you from comparing a discount rate directly against a savings APY.
Verification against official results. Our formulas reproduce published TreasuryDirect auction results to the decimal, following 31 CFR Part 356 Appendix B. If a calculator cannot reproduce a known auction result, its formulas are suspect.
The tax comparison. Almost no T-bill calculator mentions the state-tax exemption, yet for residents of high-tax states it is the single biggest reason to choose bills over a savings account. The results note flags it every time.
Frequently asked questions
The discount rate divides your profit by the face value over a 360-day year (the auction quoting convention). The investment rate divides the same profit by what you actually paid over a 365-day year. The investment rate is higher and is the number comparable to a savings account APY.
It is a historical money-market convention (the “banker’s year”) that predates modern computing and made hand calculation easier. The Treasury’s pricing rules in 31 CFR Part 356 preserve it for the discount-rate quote, while the investment rate uses the real 365-day year.
$100 at TreasuryDirect, in $100 increments. Brokerages may have higher minimums for secondary-market purchases, and auction purchases are commission-free at TreasuryDirect.
Yes. Interest on Treasury bills is exempt from state and local income tax, though it remains subject to federal income tax. See IRS Publication 550 for the reporting rules.
Yes, on the secondary market through a broker (TreasuryDirect itself requires holding to maturity or transferring out first). If market rates rose since you bought, the bill sells below what you paid; if rates fell, above. The calculator’s yields assume holding to maturity.
It varies with the rate environment, and the comparison must be after tax: compare the bill’s investment rate against the CD’s APY, then adjust the CD down for state tax if you itemize in a high-tax state. Bills also stay liquid in the secondary market, while breaking a CD usually costs an early-withdrawal penalty.
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References
- U.S. Department of the Treasury, Bureau of the Fiscal Service, “Treasury Bills” – how bills work, auction terms, and minimums. TreasuryDirect: Treasury Bills. Accessed October 19, 2026.
- U.S. Department of the Treasury, “Sale and Issue of Marketable Book-Entry Treasury Bills, Notes, and Bonds” – official pricing formulas. 31 CFR Part 356 (eCFR). Accessed October 19, 2026.
- TreasuryDirect, “Auction Results” – published high rates and prices for verification. TreasuryDirect Auction Results. Accessed October 19, 2026.
- Internal Revenue Service, “Publication 550, Investment Income and Expenses” – tax treatment of Treasury interest. IRS Publication 550. Accessed October 19, 2026.
- Federal Reserve Bank of New York, “Treasury Bill Rates” – background on bill market conventions. NY Fed Treasury Bill Rates. Accessed October 19, 2026.
- FINRA, “Treasury Securities” – investor guide to bills, notes, and bonds. FINRA: Types of Bonds. Accessed October 19, 2026.