T-Bill vs Bond Calculator
T-Bills and bonds both come from the U.S. Treasury — but they work very differently. T-Bills mature in under a year with no interest payments. Bonds pay semi-annual coupon interest for years or decades. Enter your details to compare after-tax returns side by side.
Amount invested in both options for comparison.
Current T-Bill auction rate from TreasuryDirect.gov.
T-Bill and bond income will be compared over the same period.
The annual coupon rate on the bond (e.g. 10-Year Treasury Note rate).
Both T-Bills and Treasury bonds are subject to federal income tax.
Both T-Bills and Treasury bonds are exempt from state tax. Corporate bonds are fully taxable. Enter your state rate only if comparing T-Bills to corporate bonds. Find your rate →
T-Bill vs Bond — Full Comparison
| Feature | T-Bills | Treasury Bonds |
|---|---|---|
| Issuer | U.S. Government | U.S. Government |
| Maturity | 4 weeks to 52 weeks | 10 to 30 years |
| Interest Payments | None — discount-based lump sum | Semi-annual coupon payments |
| Federal Tax | ✅ Yes — at maturity | ✅ Yes — each coupon payment |
| State Tax | ✅ Exempt by federal law | ✅ Exempt by federal law |
| Interest Rate Risk | Very Low — matures in under 1 year | High — price falls when rates rise |
| Liquidity | Fixed maturity — sell via broker only | Can sell on secondary market |
| Best For | Short-term cash management | Long-term income and portfolio diversification |
| Min. Investment | $100 on TreasuryDirect | $100 on TreasuryDirect |
T-Bills vs Bonds — Key Differences Explained
Duration and Interest Rate Risk
This is the biggest practical difference. T-Bills mature in under a year — so even if interest rates rise sharply while you hold one, you get your money back quickly and can reinvest at higher rates. Bonds lock your rate for 10–30 years, and their market value falls when interest rates rise. In 2022, long-term Treasury bonds lost 20–30% of their market value due to rate hikes.
Income Timing
T-Bills pay all earnings at maturity as a lump sum. Treasury bonds pay semi-annual coupon payments — useful for investors who want regular income throughout the year.
When Should You Choose T-Bills Over Bonds?
- You need the money back within a year
- Interest rates are rising — short duration protects you from being locked into a low rate
- You want minimal price volatility — T-Bills barely move in market value
- You are parking cash temporarily between other investments
- You are uncertain about the rate environment — short durations give you flexibility
When Should You Choose Bonds Over T-Bills?
- You want regular income — bonds pay every 6 months
- Interest rates are falling — lock in today's higher rate for 10–30 years
- You are investing for retirement or long-term goals (5+ years)
- You want to balance a stock-heavy portfolio with stable fixed income
- You believe rates will fall significantly — bond prices rise when rates drop
See your real after-tax T-Bill yield based on your bracket and state.
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Learn more: What Are Treasury Bills — Complete Guide · Are T-Bills Worth It? · Best T-Bill Duration Guide
Frequently Asked Questions
What is the difference between T-Bills and Treasury bonds?
T-Bills are short-term securities maturing in 4 to 52 weeks, sold at a discount with no periodic interest payments. Treasury bonds are long-term securities maturing in 10 to 30 years, paying semi-annual interest (coupon payments). T-Bills have lower interest rate risk because of their short duration, while bonds fluctuate significantly in price when rates change.
Are T-Bills safer than bonds?
Both are backed by the U.S. government so credit risk is identical. However, T-Bills carry much less interest rate risk because they mature in less than a year. If interest rates rise sharply, the market value of long-term bonds falls significantly while T-Bills are barely affected. For capital preservation, T-Bills are safer.
Do bonds give better returns than T-Bills?
In normal market conditions, long-term bonds offer higher yields to compensate for the longer lock-up period and greater price volatility. However, during an inverted yield curve (like 2022–2023), short-term T-Bills can yield more than long-term bonds. Always compare current rates before assuming longer duration means higher return.
Which should I choose — T-Bills or bonds?
Choose T-Bills if you need the money within a year, want to avoid price volatility, or are in a rising rate environment. Choose bonds if you want regular income (coupon payments), are investing for 10+ years, or want to lock in a long-term rate in a falling rate environment. Most investors hold both as part of a balanced portfolio.