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Treasury Bills

Treasury Bills, like other marketable Treasury securities, are debt obligations of the U.S. Government and are backed by the Government's full faith and credit. A bill is a short-term investment issued for a year or less. Investors typically buy bills at a discount from par (or "face") value. The difference between the purchase price and what the investor receives at maturity is interest.

For example, a $10,000 bill may be sold at issue for $9,900. In this case, the investor receives $10,000 when the bill matures; therefore, the interest is $100. The interest is determined by the discount rate, which is competitively determined when the bill is auctioned. It is possible for a bill auction to result in a price equal to par, which means that Treasury will issue and redeem the securities at par value.

Treasury currently issues bills with the following maturities:

  • 13-week bills and 26-week bills are auctioned once a week, usually on Monday.
  • 4-week bills and 8-week bills are auctioned once a week, usually on Thursday.
  • 52-week bills are auctioned every four weeks.
  • Cash management bills (CMBs) are not sold on a regular basis but are used to help the Government meet its short-term borrowing needs. Terms for CMBs vary.

Like other marketable Treasury securities, bills can be purchased either directly from Treasury or through an investment professional such as a bank or broker. Interest on bills is subject to federal tax in the year the investor sells them or they mature. Earnings from bills are exempt from state and local income taxes.