Treasury bills, or T-bills, are short-term U.S. government debt securities that mature in anywhere from four weeks to one year. They are backed by the full faith and credit of the U.S. government, which makes them one of the safest investments in the world. And in 2026, with rates remaining above historical averages, they are worth understanding as a place to park cash.
How T-Bills Work
T-bills are sold at a discount to face value. You pay less than the face amount upfront, and at maturity you receive the full face value. The difference is your return — effectively the interest.
For example, if a 26-week T-bill has a face value of $1,000 and sells at $975, you pay $975 today and receive $1,000 in six months. The $25 difference is your earnings. There are no periodic interest payments — T-bills are zero-coupon securities.
T-Bill Maturity Terms
The Treasury auctions T-bills on a regular schedule in the following terms:
- 4-week (approximately 1 month)
- 8-week (approximately 2 months)
- 13-week (approximately 3 months)
- 17-week (approximately 4 months)
- 26-week (approximately 6 months)
- 52-week (approximately 1 year)
The shorter the term, the lower the yield — though that relationship can invert during unusual rate environments.
Where to Buy T-Bills
You have two main options for purchasing T-bills:
TreasuryDirect.gov
TreasuryDirect is the U.S. government’s official platform for purchasing Treasury securities directly from the source. To use it:
- Create an account at TreasuryDirect.gov. You will need your Social Security number, bank account information, and email.
- Fund your TreasuryDirect account from your bank account.
- Navigate to “BuyDirect” and select T-bills.
- Choose the term (4-week, 13-week, etc.) and enter the purchase amount (minimum $100, in $100 increments).
- Select either competitive or non-competitive bidding. Most individual investors choose non-competitive, which guarantees you get the T-bill at the auction’s average price.
- Submit your purchase before the auction deadline.
At maturity, the face value is deposited directly to your linked bank account, or you can roll it into a new T-bill automatically by selecting the “reinvest” option.
Through a Brokerage Account
You can also buy T-bills through most major brokerages — Fidelity, Vanguard, Schwab, and others. The process:
- In your brokerage account, navigate to fixed income or bonds.
- Look for Treasury bills under the “new issues” section to buy at auction, or search the secondary market to buy existing T-bills.
- Select the term and quantity and place your order.
Buying through a brokerage is slightly more convenient because the T-bill shows up alongside your other investments in one account. There is typically no additional fee for new-issue T-bills at major brokerages.
T-Bills vs. Money Market Funds vs. High-Yield Savings Accounts
These three options compete for the same short-term cash:
- T-bills. Backed by the federal government. Interest is exempt from state and local taxes. Slightly less liquid than the other options since you lock in a term.
- Money market funds. Convenient, liquid, typically invest in T-bills and similar instruments. Usually competitive yields but not directly backed by the government in the same way.
- High-yield savings accounts (HYSAs). FDIC-insured up to $250,000. Easy access. Rates can change at any time with no notice.
For most people in 2026, the decision comes down to state tax situation, liquidity needs, and preference for simplicity. T-bills win on state tax exemption — that matters more in high-tax states like California and New York.
Tax Treatment of T-Bill Income
The interest earned on T-bills is subject to federal income tax but exempt from state and local income taxes. This makes T-bills especially attractive if you live in a high-tax state. The earnings are reported on a 1099-INT, which TreasuryDirect or your brokerage will send you after the bill matures.
T-Bill Laddering Strategy
A T-bill ladder means staggering purchases across different maturity dates so that a portion of your investment comes due regularly. For example, you might buy a 4-week, 8-week, 13-week, and 26-week T-bill at the same time. As each one matures, you reinvest in the longest term you want to maintain, keeping the ladder cycling.
This strategy gives you liquidity (something maturing every few weeks) while maintaining exposure to T-bill rates. It also smooths out rate fluctuations over time.
Bottom Line
T-bills are a safe, low-friction way to earn a return on cash you do not need immediately. TreasuryDirect makes it easy to buy directly from the government with no fees, and most major brokerages offer them at auction for free as well. If you are holding significant cash in a checking or low-yield savings account, T-bills are worth comparing to your current options.