T-Bill Details
Yield & Returns
A US Treasury Bill calculator helps investors quickly determine the true annualized return of a short-term government debt instrument. Because T-Bills do not pay regular coupon interest like traditional bonds, understanding their yield requires a specific calculation based on the discount price and the days remaining until maturity.
How Treasury Bills Are Priced
Treasury Bills are issued at a discount to their face value. You buy them for less than they are worth, and when they mature, the government pays you the full face value. The difference between what you paid and what you receive at maturity is your total profit.
To evaluate these investments, financial markets use two primary yield calculations:
Discount Yield
The Discount Yield is the standard quoting method used in the financial media. It calculates the return based on the face value and uses a 360-day financial year.
Discount Yield = ((Face Value - Purchase Price) / Face Value) * (360 / Days to Maturity) * 100
Investment Yield (Bond Equivalent Yield)
The Investment Yield, also known as the Bond Equivalent Yield (BEY), gives a more accurate picture of your true return. It calculates the return based on your actual purchase price and uses a full 365-day calendar year, making it easier to compare T-Bills against other investments.
Investment Yield = ((Face Value - Purchase Price) / Purchase Price) * (365 / Days to Maturity) * 100
How to Use This Tool
- Enter the Face Value of the T-Bill. This is the amount the government will pay you on the maturity date.
- Enter your Purchase Price. This must be lower than the face value to generate a positive return.
- Input the exact number of Days to Maturity remaining from your purchase date.
- Review your Investment Yield to see the true annualized return rate of your capital.
- Check the Total Profit Earned to see exactly how much cash value the bill will generate.
Frequently Asked Questions
Why is my Investment Yield higher than the Discount Yield?
The Investment Yield will always be slightly higher. This happens because the Discount Yield divides your profit by the larger Face Value and assumes a shorter 360-day year. The Investment Yield uses your actual, smaller Purchase Price as the baseline and assumes a standard 365-day year, resulting in a higher percentage.
Are US Treasury Bills taxed?
The profit earned from a T-Bill is subject to federal income tax. However, it is completely exempt from state and local taxes. This makes Treasury Bills highly attractive to investors living in regions with high state income tax rates.
What happens if I sell my T-Bill before maturity?
You can sell a T-Bill on the secondary market before it matures. If you do, your profit or loss depends entirely on the current market interest rates. If market rates have dropped since you bought it, the value of your T-Bill increases. If market rates have risen, the value of your T-Bill drops, and you might receive less than you originally paid.