Treasury Bill Yield Calculator

A Treasury Bill (T-Bill) is a short-term U.S. government debt obligation backed by the full faith and credit of the federal government. Unlike bonds and notes that pay periodic coupons, T-Bills are zero-coupon instruments — they are sold at a discount to their face (par) value and mature at full face value. The difference between what you pay and what you receive at maturity is your return.

The U.S. Treasury regularly auctions T-Bills in six standard maturities: 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). Individual and institutional investors alike use T-Bills as one of the safest, most liquid short-term investments available, making the treasury bill yield calculator an essential tool for fixed-income analysis.

Because T-Bills mature in less than one year, they carry virtually no interest-rate risk compared to longer-term bonds. They are also exempt from state and local income taxes, which is a significant advantage for investors in high-tax states. For cash management, money market funds, and conservative portfolio construction, understanding T-Bill yields is critical.

The minimum purchase amount for T-Bills is $100, sold in $100 increments. You can buy directly from the U.S. Treasury at TreasuryDirect.gov or through a brokerage. Secondary market trading also allows you to sell before maturity, though the price will reflect the prevailing interest rate environment at the time of sale.

T-Bill yields are not as straightforward as bond coupon rates. Because T-Bills trade at a discount and have no coupon, the financial industry uses four distinct yield measures — each suited to a different comparison purpose. The treasury bill yield calculator computes all four simultaneously so you can use the right measure for your analysis.

All four measures start from the same discount amount: Discount = Face Value − Purchase Price. From there, the measures diverge in how they annualize that discount and what base they use for the calculation.

The Bank Discount Yield (BDY) is the traditional Wall Street quoting convention. It uses face value (not price) as the base and a 360-day year, which means it systematically understates true returns. It is useful mainly for comparing one T-Bill quote to another, not for comparing T-Bills to other investments.

The Money Market Yield (MMY), also called the CD-equivalent yield, also uses a 360-day year but uses the purchase price as the base instead of face value. This makes it directly comparable to bank certificate-of-deposit rates, which follow the same convention.

The Bond Equivalent Yield (BEY) uses a 365-day year and purchase price as the base. This is the most useful measure for comparing T-Bills to notes and bonds (which also use 365-day conventions). For T-Bills with 182 days or fewer to maturity, the BEY formula is straightforward. Longer maturities require a more complex quadratic formula to account for semiannual compounding assumptions.

The Effective Annual Yield (EAY) applies compound interest to give the true annualized return if the discount were reinvested at the same rate. It is always the highest of the four measures and provides the most accurate picture of total return on an annualized basis.

Each of the four yield measures computed by this T-Bill yield calculator serves a specific analytical purpose. Knowing when to use each one prevents costly apples-to-oranges comparisons.

The Bank Discount Yield is the number you see quoted in the financial press and on Bloomberg terminals for T-Bill auctions. It is always the lowest of the four measures because it divides by the larger face value and uses the shorter 360-day year. Never compare a T-Bill's BDY directly to a bond's yield-to-maturity — the result will be misleading.

The Bond Equivalent Yield is the standard used for cross-asset comparison in the fixed-income world. When analysts say a 3-month T-Bill "yields 5.2%," they almost always mean the BEY. This is also the figure that most online treasury yield curve data sources report. Using the BEY allows you to directly compare a 13-week T-Bill to a 2-year Treasury note yield without adjustment.

The Effective Annual Yield assumes you can reinvest the proceeds of each T-Bill at the same rate when it matures. While no investment is guaranteed to achieve this, the EAY provides the most theoretically pure annualized return figure and is the best measure for long-run compounding analysis.

The primary reason investors need a treasury bill yield calculator is to make fair comparisons between T-Bills and other cash-equivalent instruments. The yield conventions differ, so raw numbers cannot be compared without conversion.

T-Bills vs. Bank CDs: Certificate-of-deposit rates are quoted on a 360-day actual/360 basis, so the Money Market Yield is the appropriate T-Bill figure to use in this comparison. In practice, T-Bills often offer competitive or superior yields to CDs, particularly for shorter maturities, and they offer the additional advantage of state and local tax exemption. A CD yielding 5.00% in a state with 6% income tax is effectively less than a T-Bill with a 4.90% MMY for a resident of that state.

T-Bills vs. Treasury Notes and Bonds: Use the Bond Equivalent Yield for this comparison. T-Bill BEYs are plotted on the same yield curve as 2-year, 5-year, and 10-year Treasury yields. When short-term rates exceed long-term rates (an inverted yield curve), T-Bills can offer better returns than longer-duration bonds with the added benefit of zero price risk from rate changes.

T-Bills vs. Money Market Funds: Money market funds hold a portfolio of T-Bills and other short-term instruments and typically quote a 7-day or 30-day annualized yield. These are MMY-equivalent figures. Holding T-Bills directly typically yields slightly more than a money market fund because there are no management fees, though you sacrifice some liquidity and diversification.

T-Bills vs. Savings Accounts: High-yield savings accounts quote APY (Annual Percentage Yield), which is equivalent to the Effective Annual Yield. Use the EAY from this calculator to make a direct comparison with a savings account's APY. When the Federal Reserve raises the federal funds rate, T-Bill yields typically rise quickly to match or exceed savings account rates.

Understanding how T-Bill prices are set helps you use the T-Bill yield calculator more effectively. Treasury Bills are sold through weekly auctions run by the U.S. Department of the Treasury. There are two types of bids: competitive and noncompetitive.

Noncompetitive bids are the choice for most individual investors. You agree in advance to accept whatever discount rate the auction determines, and you are guaranteed to receive the T-Bill. This is how purchases through TreasuryDirect.gov work. The discount rate — and therefore the purchase price — is not known until the auction closes.

Competitive bids are placed by primary dealers, institutional investors, and sophisticated individuals who specify the exact discount rate they are willing to accept. If your bid is at or below the stop-out rate (the highest accepted rate), you receive an allocation. If your bid is above the stop-out rate, you receive nothing.

After issuance, T-Bills trade in the secondary market with extremely high liquidity. Bid-ask spreads are typically just 1–2 basis points for on-the-run (recently issued) T-Bills. When you buy a T-Bill in the secondary market, you use the purchase price and remaining days to maturity in this calculator — not the original issue price or original term.

Auction results are published on the TreasuryDirect website and include the high discount rate, the median discount rate, and the ratio of total bids to total accepted bids (bid-to-cover ratio). A high bid-to-cover ratio signals strong demand and tends to produce slightly lower yields. Monitoring auction results helps investors identify when T-Bill yields are particularly attractive relative to the federal funds rate target.

One of the most compelling features of Treasury Bills is their favorable tax treatment. The discount income (your profit from buying below face value and receiving face value at maturity) is subject to federal income tax, but it is exempt from all state and local income taxes. For investors in high-tax jurisdictions such as New York, California, or New Jersey, this exemption can add significant after-tax value.

For example, if you live in a state with a 10% state income tax rate and are in the 22% federal bracket, a T-Bill with a 5.0% BEY has an after-tax yield equivalent of about 5.0% × (1 − 0.22) = 3.90% on a federal basis, but a taxable instrument would need to yield 5.0% / (1 − 0.32) = 7.35% before state and federal tax to match. This makes T-Bills especially powerful for investors in high-income-tax states.

From a portfolio strategy perspective, T-Bills play several roles. They serve as a cash parking vehicle during periods when an investor is waiting to deploy capital into equities or real estate. They also function as the risk-free rate benchmark in asset allocation models — the Capital Asset Pricing Model (CAPM) uses the T-Bill yield as its risk-free rate input. When T-Bill yields are unusually high relative to expected equity returns, some investors shift from stocks into T-Bills until valuations improve.

T-Bill laddering is a common strategy: purchasing multiple T-Bills with staggered maturities (e.g., one maturing each month for the next six months) to ensure regular liquidity while capturing higher yields on longer maturities. Use the treasury bill yield calculator to compare the BEY across different maturities and identify which points on the T-Bill yield curve offer the best risk-adjusted value at any given time.