Treasury Yield Calculator
Convert a Treasury bill's discount price into the yield you actually earn — and add the state-tax exemption that makes it worth more than the headline suggests.
Treasury Yield Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Results are a model, not a quotation — an institution's own figures govern.
- Every input is an assumption; change one and the answer changes with it.
- Rounding is applied only at the display layer, so totals may differ by a cent from a statement that rounds each line.
In short: A $1,000 Treasury bill bought at $985.50 with 182 days remaining has a bank-discount yield of 2.868% but a true investment rate of 2.951%. Because Treasury interest is exempt from state tax, a CD would need to yield 3.139% to match it in a 6% state — a combined advantage of 27.1 basis points over the quoted figure.
Formula
The discount convention divides by face over a 360-day year; the investment rate divides by the price you actually paid over 365. Both differences push the quoted figure below the truth.
Worked Example
- Find the gain. $1,000 − $985.50 = $14.50 over 182 days.
- Apply the discount convention. $14.50 ÷ $1,000 × (360 ÷ 182) = 2.868% — the number on the auction sheet.
- Apply the honest convention. $14.50 ÷ $985.50 × (365 ÷ 182) = 2.951%, because you invested $985.50, not $1,000.
- Note the gap. The quoted yield is 8.3 basis points light.
- Add the tax exemption. Free of state tax, it matches a CD yielding 3.139% in a 6% state.
Analyst's note. Two conventions understate this bill and one advantage is invisible on any screen. The bank-discount yield divides the gain by face value rather than by the money you actually committed, and uses a 360-day year. Correcting both adds 8.3 basis points. Then the state-tax exemption — worth nothing to a Florida resident and 18.8 basis points to someone in a 6% state — means the honest comparison against a CD is 3.139% versus the 2.868% you were quoted.
Strengths & Limits Of This Model
Where this engine is strong
- Runs entirely in your browser — no figure you type is transmitted or stored.
- Shows the full working, so every number can be traced and challenged.
- Free, unmetered and free of affiliate incentives.
Where it stops
- Generalised assumptions cannot capture every individual circumstance.
- Jurisdiction-specific rules and mid-year changes may not be reflected.
- A model output is not a substitute for a professional review of your position.
Practical Use Cases
Comparing bills against savings accounts and CDs
Never compare a quoted discount yield with a quoted APY — they are computed on different bases. Convert the bill to its investment rate here, then to a taxable equivalent, and only then set it against a CD Calculator or APY Calculator figure.
Deciding where to park short-term cash
Bills settle quickly, carry no credit risk and can be sold before maturity, which makes them a strong home for a reserve you may need. Size that reserve first with the Emergency Fund Calculator.
Building a bill ladder
Staggering maturities gives regular access while capturing most of the yield. Run each rung to see its cost and profit, then project the combined balance with the Savings Calculator.
Methodology & Editorial Standards
The bank-discount yield follows the market convention of dividing the gain by face value and annualising over 360 days, which is how bills are quoted at auction. The investment rate — the coupon-equivalent or bond-equivalent yield — divides by the purchase price and annualises over 365 days, which is the economically correct measure and the one comparable with other instruments. The effective annual yield compounds the holding-period return. The taxable equivalent yield grosses the investment rate up by the state rate only, since Treasury interest is exempt from state and local income tax but fully subject to federal tax. Bills of more than one year, accrued interest on notes, and secondary-market accrued conventions are not modelled. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Treasury Yield Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
Why are there two different yields for the same bill?
Convention. The bank-discount yield divides the gain by face value over a 360-day year; the investment rate divides by the price you actually paid over 365 days. The second is economically correct — 2.951% against a quoted 2.868% here.
Which yield should I use to compare with a savings account?
The investment rate, and then only after grossing it up for the state-tax exemption. Comparing a quoted discount yield against a bank's APY is comparing two different measures and will always flatter the bank.
What is the taxable equivalent yield?
The yield a fully taxable instrument would need in order to leave you the same amount after tax. Treasury interest escapes state and local income tax, so in a 6% state this bill matches a CD paying 3.139%.
Are Treasury bills really tax-free?
Only at state and local level. Federal income tax applies in full, so a 24% federal bracket takes $3.48 of the $14.50 gain here. The exemption is still valuable in high-tax states and worth nothing in states with no income tax.
How does a Treasury bill actually work?
You buy it below face value and receive the full face value at maturity. There are no coupon payments — the entire return is the difference between the two, which is why it is described as a discount instrument.
Are Treasury bills safe?
They carry the full faith and credit of the US government and are generally treated as the risk-free benchmark. The real risks are inflation eroding purchasing power and, if you sell before maturity, a price move against you.
Can I sell before maturity?
Yes, in a deep and liquid secondary market. The price you get depends on prevailing rates at the time, so you may realise more or less than the accrued value. Held to maturity, the return is known at purchase.
What is the minimum investment?
US Treasuries are sold in $100 increments through TreasuryDirect, with brokers often imposing $1,000 minimums. The engine lets you size any position and reports the cost and profit at your chosen amount.
How do bills compare with money market funds?
Funds offer daily liquidity and diversification but charge a fee and may hold non-Treasury paper, which reduces both the state-tax exemption and the credit quality. Direct bills avoid the fee entirely.
What is the difference between bills, notes and bonds?
Bills mature in one year or less and pay no coupon; notes run two to ten years and pay semi-annual coupons; bonds run twenty to thirty years. This engine prices bills — use the Bond Yield Calculator for coupon-bearing issues.
Does inflation matter for short-term bills?
Less than for long bonds, but the real return is what counts. A 2.951% yield against 3% inflation is slightly negative in real terms. Check the purchasing power with the Inflation Calculator before assuming a positive yield is a positive return.
Why does the 360-day convention exist?
It is a historical money-market practice from before electronic calculation, when a 360-day year simplified arithmetic. It persists in quoting conventions despite being economically arbitrary, which is precisely why the investment rate is also published.
How often are bills auctioned?
Four, eight, thirteen, seventeen, twenty-six and fifty-two week bills are auctioned on regular weekly or monthly cycles. Non-competitive bids from individuals are filled at the rate set by competitive bidding.
What is a ladder?
Holding bills with staggered maturity dates so that some matures regularly. It provides recurring access to cash without selling into the secondary market, at the cost of a slightly lower average yield than a single longer bill.
Is the profit taxed as income or capital gain?
The discount on a Treasury bill is taxed as ordinary interest income at the federal level, not as a capital gain, and is recognised at maturity or sale. State and local tax does not apply.
Is this treasury yield calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.
Can I use it offline?
Largely, yes. Because computation is client-side, the page continues to calculate without a network connection once it has loaded.