Treasury Bills
- Treasury bills are short-term securities maturing in one year or less.
- Bills are sold at a discount from their face value.
- When a bill matures, the investor receives the face value.
- The difference between the purchase price and the face value equals the interest earned.
For example, if a $1,000 26-week bill sells at auction for a 3.80% discount rate, the purchase price would be $980.79, a discount of $19.21. The purchase price can be determined from the following formula:
| P = F (1 - (d x t)/360), thus P = 1000 (1- (.0380 x 182)/360), solving P = $ 980.79 |
P = Price F = Face value d = rate of discount t = days to maturity |
Methods of Purchase
- Treasury bills can be purchased by individual investors in TreasuryDirect.
- Treasury bills can be purchased by individuals, organizations, fiduciaries, and corporate investors in Legacy Treasury Direct, or through a broker or financial institution.
- Institutions may establish a TAAPS account to bid for Treasury securities directly at auction. Learn more about establishing a TAAPS account.
Maturity Terms by Purchase Method:
| Maturity Term | TreasuryDirect | Legacy Treasury Direct | Broker/Financial Institution | TAAPS |
| 4-Week Bill | Yes | *No | Yes | Yes |
| 13-Week Bill | Yes | Yes | Yes | Yes |
| 26-Week Bill | Yes | Yes | Yes | Yes |
| 52-Week Bill | Yes | Yes | Yes | Yes |
| Cash Management Bills | No | No | Yes | Yes |
*Not sold in Legacy Treasury Direct, but can be transferred into this system after purchase.
Auction Frequency
- 4-week bills are normally auctioned on Tuesdays.
- 13-week and 26-week bills are normally auctioned on Mondays.
- 52-week bills are normally auctioned on Tuesdays every four weeks.
- Cash management bills are auctioned only as Treasury financing needs require.
For specific auction dates, see the Tentative Auction Schedule or the Upcoming Treasury Marketable Securities Auctions. Institutions may also sign up for e-mail notification of auctions.
Bidding
Auction bids for Treasury securities may be submitted as noncompetitive or competitive.
- With a noncompetitive bid, a bidder agrees to accept the discount rate determined at auction. A bidder is then guaranteed to receive the full amount of the security bid.
- With a competitive bid, a bidder specifies the discount rate that is acceptable. This bid may be accepted in the full amount if the rate specified is less than the discount rate set by the auction; accepted in less than the full amount requested if the bid is equal to the high discount rate; or not awarded if the rate specified is higher than the discount rate set at the auction.
To place a noncompetitive bid, an individual investor may use TreasuryDirect. Individuals, organizations, fiduciaries, and corporate investors may use Legacy Treasury Direct, or a broker or financial institution.
To place a competitive bid, a bidder must use a broker, financial institution, or have an established TAAPS account.
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| Original issue rate: |
The discount rate determined at auction.
See rates in recent auctions |
| Minimum purchase: | $100 |
| Maximum purchase: |
Noncompetitive - $5 million
Competitive - 35% of offering amount (see types of bidding) |
| Investment increment: | Multiples of $100 |
| Issue Method: | Electronic |
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Redeem, Reinvest, or Sell
A Treasury bill can be held to maturity or sold before it matures. If a bill is held to maturity, the bill's principal can be used to buy another security or the bill can be redeemed. View more information on how to redeem, reinvest, or sell Treasury bills.
Tax Considerations
Interest on Treasury bills is exempt from state and local taxes, but is subject to federal tax. See additional information on tax considerations.
