How to Buy Treasury Bills (T-Bills): A Complete 2026 Guide

✓ T-Bill terms, purchase minimums, and tax treatment verified against TreasuryDirect guidance, September 2026.

A Treasury bill — T-Bill for short — is a short-term U.S. government debt security that matures in a year or less. You buy it at a discount, the government pays you full face value at maturity, and the difference is your interest. Backed by the full faith and credit of the U.S. Treasury, T-Bills are about as close to a risk-free dollar investment as you can get.

Sounds boring? Maybe. But boring pays. When short-term rates sit in the 3.5–4% range, T-Bills routinely match or beat high-yield savings accounts — with two perks a savings account can't offer: exemption from state and local income tax, and a guaranteed, locked-in rate. This guide walks through exactly how to buy them, step by step.

T-Bills won't make you rich. They make sure the money you can't afford to lose doesn't lose — and they do it tax-efficiently.

What a T-Bill Actually Is (In 60 Seconds)

The U.S. Treasury borrows money by issuing securities. Bills are the shortest-term ones, sold in maturities of 4, 8, 13, 17, 26, and 52 weeks. Notes (2–10 years) and bonds (20–30 years) pay periodic coupons; T-Bills don't. Instead:

1. You pay less than face value — say $975 for a $1,000 bill.
2. The Treasury pays you $1,000 at maturity.
3. Your $25 gain is your interest, taxed as ordinary federal income but exempt from state and local taxes.

Key mechanics to know before you buy:

• Minimum purchase: $100 through TreasuryDirect, and increments of $100. (Brokerages vary — some let you buy at auction with no fee, some only offer secondary-market bills.)
• How they're sold: Weekly auctions. You can bid non-competitively (you accept whatever yield the auction sets — right choice for 99% of people) or competitively (you name your yield and risk getting nothing).
• No interest payments during the term: Your entire return arrives at maturity.
• Sale before maturity: Possible only through a brokerage account in the secondary market — not through TreasuryDirect.

TreasuryDirect vs Brokerage: Where Should You Buy?

There are two ways to buy T-Bills at auction, and the right answer depends mostly on one thing: do you want flexibility to sell early?

Practical recommendation: if you already have a brokerage account, buy there. Same yields, same auction, zero fees at major brokers like Fidelity and Schwab, and you can sell early if life happens. TreasuryDirect is perfectly fine if you're a pure set-and-forget investor.

How to Buy T-Bills: Step by Step

Step 1: Decide Your Term and Amount

Match the maturity to when you'll need the money. Saving for a tax bill due in 5 months? A 17- or 26-week bill fits. Parking the final slice of your emergency fund? Keep terms short. This is the same logic behind building a CD ladder — stagger maturities so cash frees up on a schedule instead of all at once.

Step 2: Place a Non-Competitive Bid at Auction

At TreasuryDirect: log in, choose "BuyDirect → Bills," pick the term, enter the amount (multiples of $100), and select the auction date. At a brokerage: search the Treasury auctions section (Fidelity calls it "Fixed Income → Treasury Auctions"), pick the bill, and place a non-competitive order. You won't know your exact yield when you bid — it's set at the auction — but non-competitive bidders always get filled.

Step 3: Payment and Settlement

TreasuryDirect pulls the estimated price from your linked bank account; any small difference is trued up after the auction. At a brokerage, the purchase amount settles from your cash balance like any other trade.

Step 4: At Maturity — Cash Out or Roll Over

Face value lands in your bank or brokerage account on maturity day. If you don't need it, schedule a rollover into a new bill and keep the ladder going. That's it. There is no step 5. This is genuinely one of the simplest investments that exists.

T-Bill Ladders: The Strategy Most People Should Use

A single T-Bill locks your money until maturity. A ladder splits your cash across staggered maturities so something always matures soon — you get regular access and an average-out rate instead of betting everything on one auction.

Example: a $10,000 four-rung ladder using 4-week bills:

From week 4 on, $2,500 matures every single week. Need cash? Skip one rollover. Rates moved? New purchases capture the new rate automatically. A 13-week version works the same way and requires less maintenance — a bill matures monthly instead of weekly.

The Real Math: What You Actually Earn

T-Bill yields are quoted as annualized percentages, but your dollar gain depends on the term. A 4% discount rate on a 26-week bill doesn't pay $40 per $1,000 — it pays about $19.57, because you're only lending for half a year:

Now the tax edge. Say you live in California (top state rate ~13.3%) and a T-Bill yields the same 4.0% as a savings account. The bank interest gets hit with federal plus state tax; the T-Bill skips state entirely. For a high earner in a high-tax state, that's the difference between a ~2.5% after-tax rate on the savings account and roughly 2.9% on the T-Bill — a real, guaranteed 0.4-point edge on identical risk. In a no-income-tax state like Texas or Florida, the two are equivalent.

T-Bills vs the Alternatives

• vs High-yield savings accounts: HYSAs offer instant access but variable rates that the bank can cut any time. T-Bills lock your rate. Many savers hold both — see our HYSA comparison for the cash you want instantly liquid.
• vs CDs: Functionally similar (locked rate, fixed term). T-Bills usually win on state-tax exemption and a lower minimum ($100 vs typically $500–$1,000 for CDs); CDs occasionally price slightly higher.
• vs money market funds: MMFs are more liquid (settle in 1–2 days) but their yield floats daily. T-Bill gains are contractual once you buy.
• vs stocks: Not a competition. T-Bills are for money you can't afford to fluctuate. For long-term money, stocks win over decades — our emergency fund vs investing guide covers where to draw the line.

Common Mistakes to Avoid

Buying 52-week bills with money you need next quarter. Through TreasuryDirect, early exit isn't a button — it's a transfer process to a brokerage that takes days. Match terms to your actual cash needs.

Assuming the quoted rate is your dollar return. As the math table above shows, a 4-week bill at 4% pays about $3 per $1,000. Annualize it in your head before comparing against anything.

Ignoring the state tax exemption. In high-tax states, this is the single best reason to prefer T-Bills over bank products at equal rates. Compute your after-tax yield before choosing.

Buying secondary-market bills at a premium. On the secondary market, bills trade at prices that may imply a lower yield than the next auction. Beginners should stick to new issues at auction.

Letting matured cash sit idle. If you don't set a rollover, matured funds sweep to cash and start earning (almost) nothing. Automate the rollover or have a plan for the money.

Quick Summary

1. T-Bills are short-term (4–52 week) U.S. government debt sold at a discount, paying face value at maturity
2. Buy at auction, non-competitively, via TreasuryDirect ($100 min) or a zero-fee brokerage
3. Interest is exempt from state and local taxes — a real edge in high-tax states
4. Ladder staggered maturities so cash frees up on a schedule
5. Match the term to when you need the money; don't lock cash you might need early

T-Bills are a tool, not a strategy. They're the right tool when the job is preserving dollars you'll need soon, beating savings-account rates, and skipping state tax while doing it. Get your emergency fund and investments sorted first — then T-Bills handle everything in between.