Calculate the real dollar earnings on U.S. Treasury bills, notes, and bonds — then see exactly how they stack up against CDs and high-yield savings accounts after federal and state taxes. Treasury interest is exempt from state income tax, which is the quiet advantage most calculators ignore.
Pro tip: When comparing a T-bill to a CD at the same APY, the T-bill almost always wins in states with income tax — because every dollar of CD interest gets taxed by your state, but Treasury interest does not. In California (13.3% top rate), that silent advantage can be worth hundreds of dollars a year on a $50,000 position without changing a single input.
U.S. Treasury Yield Curve
Annualized yields across maturities — FRED, as of April 2026
Splits your investment across 4-week, 8-week, 13-week, and 26-week T-bills so a portion of your cash comes free each month. Reinvest maturities at the back of the ladder to capture today’s rates without locking up every dollar.
| Rung | Term | Yield | Allocated | Interest | Matures |
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Your nominal yield is only half the story. The real (inflation-adjusted) return tells you whether your purchasing power is actually growing. Current 12-month CPI: 3.1% (FRED CPIAUCSL, April 2026).
Enter an investment amount to see how your Treasury performs against inflation.
Enter your total liquid savings and your target monthly expenses. We’ll split your cash across the right tiers — emergency fund in HYSA, short-term bills for near-term needs, notes for the medium term, and equities for the long haul.
How the Treasury Bill Calculator Works
Start by entering the amount you want to invest — this is the cash you would send to TreasuryDirect or to your brokerage to buy Treasuries on the secondary market. Pick a maturity from any of the three tiers: T-bills settle in under a year and are sold at a discount (you pay less than face value and get the full face value back), T-notes pay semiannual coupons over 2 to 10 years, and T-bonds run 20 to 30 years. The tool uses the current yield (annualized) for each maturity pulled from the FRED constant-maturity Treasury series, then applies your selected federal bracket and state income tax rate to produce an honest, after-tax number you can actually plan around.
The State Tax Exemption — The Advantage Most Calculators Skip
This is the single most important fact about U.S. Treasuries that generic yield calculators miss: interest earned on Treasury securities is exempt from state and local income tax, by federal statute (31 U.S.C. § 3124(a)). It does not matter whether you hold a 4-week T-bill or a 30-year bond — the state exemption applies to every dollar of interest. Bank CDs, by contrast, are fully taxable at the federal and state level. At identical yields, a T-bill and a CD produce identical pre-tax income — but after tax, the T-bill pulls ahead in any state with an income tax, and the gap widens the higher your state rate climbs. In California (13.3% top marginal), a resident in the top bracket earning 4.40% on Treasuries keeps the entire yield; a 4.40% CD actually delivers roughly 3.81% after state tax. Same headline rate, meaningfully different take-home.
Understanding the Yield Curve (and What Inversions Actually Signal)
The chart above plots the current annualized yield for every standard Treasury maturity. In a normal curve, longer maturities pay more than shorter ones — investors demand a premium for locking money up longer. A flat curve means short and long rates are near each other; an inverted curve is when short-term yields (say, 3-month) exceed long-term yields (10- or 30-year). Historically, an inverted 3-month vs 10-year spread has preceded every U.S. recession since 1960 by anywhere from six months to two years, which is why economists watch it so closely. For a saver, an inverted curve is actually a gift: it means you can earn more on a risk-free 13-week T-bill than on a decade-long bond, with no duration risk and quick reinvestment flexibility.
T-Bills vs CDs vs High-Yield Savings — The Honest Comparison
All three are about as safe as American savings instruments get, but the mechanics differ in ways that matter:
- T-Bills are backed by the full faith and credit of the United States government. Interest is state-tax-exempt. They trade in a deep secondary market, so you can sell early (at market price, not face) if you need liquidity. Minimum purchase is $100 at TreasuryDirect.
- CDs are FDIC-insured up to $250,000 per depositor per bank. Fully taxable. Breaking a CD early usually triggers an early withdrawal penalty of 3 to 12 months of interest, which can wipe out your gains on a short-term CD.
- High-yield savings accounts are also FDIC-insured and fully taxable. The rate floats, meaning your yield can drop the day after you deposit. Liquidity is excellent — usually same-day transfer.
The right answer depends on your time horizon, your state tax rate, and whether you value certainty over flexibility. For a 13-week goal, a T-bill at 4.45% in a 10% state beats a 4.90% CD after tax. For money you might need next week, a HYSA is still the winner despite the lower headline rate.
How to Buy T-Bills: TreasuryDirect vs a Brokerage
You have two real options. TreasuryDirect.gov is the federal government’s own platform — free, no fees, and you can participate in weekly Treasury auctions with a non-competitive bid that guarantees you’ll get the issue at the auction rate. The interface is famously dated, and you can’t sell before maturity (you’d need to transfer the security to a brokerage first). For most savers who plan to hold to maturity, it is the cleanest path. A brokerage (Fidelity, Schwab, Vanguard, and major banks all offer this) is a step up in flexibility: you can buy at auction for zero commission at most major brokers, you can sell at any time on the secondary market, and all your holdings sit alongside your equities in one consolidated view. The trade-off is slightly more complexity at purchase, and a possibility of small bid-ask spreads if you sell before maturity.
T-Bill Laddering — Always Have Cash Coming Due
A T-bill ladder is a simple strategy: instead of putting your entire stack into one maturity, you spread it across several — 4-week, 8-week, 13-week, and 26-week. As each rung matures, you roll it into a new 26-week (the back of the ladder). Within about six weeks, you have cash coming due every month. The strategy delivers three advantages simultaneously: liquidity (part of your money is always near-maturity), rate protection (you're never 100% locked in if short rates rise), and higher blended yield than a pure savings account. The Pro ladder builder above does the math automatically and shows your reinvestment calendar.
Risks That Treasuries Are Not Immune To
Treasuries are risk-free in one specific sense: the U.S. government will pay you back in dollars. They carry no credit risk. What they do carry is interest-rate risk on longer maturities (if rates rise after you buy, the market value of your bond drops — only a concern if you sell before maturity) and inflation risk on any fixed-coupon instrument (if CPI runs higher than your nominal yield, your real purchasing power shrinks). The Pro real-return analyzer above calculates exactly how much of your nominal yield is being eaten by inflation at current CPI. For deep inflation protection, consider Series I Bonds or TIPS — the interest on both adjusts with CPI.
How Treasury Interest Is Taxed at the Federal Level
Interest on Treasuries is taxable at the federal level as ordinary income. Your brokerage or TreasuryDirect will issue a Form 1099-INT at year-end reporting the full interest earned (or, for zero-coupon T-bills, the discount that became interest at maturity). You report it on Schedule B if total interest exceeds $1,500 for the year. For T-bills bought at auction and held to maturity, all the interest is earned in the year of maturity — even if you held the bill across a year boundary. This can be a useful planning tool: if you know you’ll be in a lower federal bracket next year, scheduling maturities into that year shifts income into the lower bracket. Always consult a CPA for personalized tax planning, but the mechanical rules are well-documented in IRS Publication 550.
Looking for related tools? Try our CD Calculator for a dedicated certificate-of-deposit analyzer, the Compound Interest Calculator for longer-horizon growth modeling, or the Inflation Calculator for historical purchasing-power conversions. Browse all Personal Finance tools to build your full savings plan.
Frequently Asked Questions
What is a Treasury bill?
A Treasury bill, or T-bill, is a short-term U.S. government debt security with a maturity of one year or less. T-bills are sold at a discount to face value, and the difference between the purchase price and the face value paid at maturity represents the interest earned.
Are Treasury bills safe?
Treasuries are backed by the full faith and credit of the U.S. federal government and are considered among the safest investments available. Principal is returned at maturity as long as the government honors its obligations.
Is Treasury interest taxed?
Interest on U.S. Treasury securities is subject to federal income tax but is exempt from state and local income tax by federal statute under 31 U.S.C. Section 3124. This exemption makes Treasuries more attractive than equivalent-yield CDs for residents of high-tax states.
How do T-bills compare to CDs?
At the same advertised yield, T-bills typically beat CDs after taxes in states with income tax because CD interest is taxed at both federal and state levels. T-bills also offer better liquidity through the secondary market, though unlike CDs they are not FDIC insured and rely instead on government backing.
How can individuals buy Treasuries?
Individuals can buy Treasuries directly through TreasuryDirect.gov without fees, or through a brokerage account on the primary or secondary market. Brokerages may allow easier laddering and selling before maturity but can charge fees.