US Treasury Bill Calculator

Calculate the discount price, yield, and investment returns of US Treasury Bills (T-Bills).

Status: Algorithmic Audit (CPA Review Pending)
Jurisdiction: United States (IRS & SSA Standards)
Tax Year / Constants: 2026 Statutory Limits
Data Privacy: 100% Client-Side In-Browser

The Mathematical Formula

Purchase Price P = Face Value × [ 1 - (Discount Rate × Days to Maturity / 360) ] ; Bond Equivalent Yield (BEY) = [ (Face Value - Price) / Price ] × (365 / Days)

Variable & Parameter Definitions

  • Purchase Price P The discounted cash price paid upfront to purchase the T-Bill at auction.
  • Face Value The maturity par value paid by the US Treasury on the maturity date (standard: $1,000 par).
  • Discount Rate The annualized bank discount quote based on a 360-day year standard.
  • Bond Equivalent Yield (BEY) The true annualized investment return normalized to an actual 365-day year, directly comparable to CD and bond yields.
  • Days to Maturity Maturity tenor (e.g. 28 days for 4-week, 91 days for 13-week, 182 days for 26-week, 364 days for 52-week T-Bills).

Real-World Worked Scenario: Purchasing a 26-Week (182-Day) $10,000 T-Bill at 5.0% Discount Rate

An investor buys $10,000 par value of 26-week US Treasury Bills at a 5.00% discount rate.

  1. Discount Calculation: $10,000 × 0.05 × (182 ÷ 360) = $252.78.
  2. Purchase Price Paid: $10,000 - $252.78 = $9,747.22.
  3. At Maturity (182 Days Later): The US Treasury deposits the full $10,000 face value (yielding $252.78 in interest profit).
  4. Bond Equivalent Yield (BEY): ($252.78 ÷ $9,747.22) × (365 ÷ 182) = 0.02593 × 2.0055 = 5.20% true annualized yield.
  5. State Tax Exemption: T-Bill interest is 100% exempt from state and local income taxes.
Key Financial Takeaway: Treasury Bills are zero-coupon debt instruments: you buy at a discount and receive full face value at maturity with zero state income tax.

Strategic Insights & Pitfalls to Avoid

  • ✓ 100% State Tax Free: In high-tax states (California, New York, Massachusetts), T-Bills provide higher net take-home returns than bank CDs paying identical nominal rates.
  • ✓ Zero Default Risk: Backed by the full faith and credit of the United States Government, making them the safest liquid dollar asset on earth.
  • ✓ Auto-Roll TreasuryDirect Feature: You can set up automatic reinvestment to roll maturing T-Bill proceeds into new auctions for up to 2 years automatically.

Frequently Asked Questions

How is T-Bill interest taxed?

T-Bill interest is subject to federal income tax, but is 100% exempt from state and local income taxes under 31 U.S. Code § 3124.

Why is the Bond Equivalent Yield higher than the discount rate?

Because the discount rate divides interest by face value over a 360-day year, whereas BEY divides interest by the actual discounted purchase price over a 365-day year.

What is the minimum investment for US Treasury Bills?

The minimum purchase is $100 in increments of $100 through TreasuryDirect or any major brokerage account.

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