Treasury Bill Yield Calculator
Convert between a treasury bill discount rate, purchase price, investment yield and bond equivalent yield, and compare a bill against a certificate of deposit or money market fund.
Last reviewed by the Radiatus Cloud team
Planning cloud or compliance spend?
Our team optimises cloud cost & risk for finance leaders.
Bills are quoted on a basis that understates the return
Treasury bills pay no coupon. They are sold below face value and redeem at par, and the gain is the return. The convention is to quote them as a discount rate, which is the gain expressed as a percentage of face value on a 360 day year. That understates the actual return twice over: the investor's capital is the purchase price, not the face value, and a year has 365 days. A bill quoted at a five percent discount rate produces a genuine annual return noticeably above five percent.
Three different yields, all correct
The discount rate is the quoting convention. The investment yield, also called the coupon equivalent or bond equivalent yield, restates the return as a percentage of the price paid on a 365 day year, which is what makes it comparable to a certificate of deposit or a bond. The effective annual yield goes one step further and compounds the reinvestment, which matters for short bills rolled several times a year. Comparing a bill's discount rate against a deposit's annual percentage yield is comparing two different measures and always favours the deposit incorrectly.
The tax treatment is part of the return
In the United States, treasury bill interest is exempt from state and local income tax while bank deposit interest is not. For an investor in a high tax state that exemption can be worth half a percentage point or more, which frequently reverses the ranking against a nominally higher paying deposit. The calculator shows the taxable equivalent yield so the comparison is made on the same basis.
Related tools
- Compound Interest Calculator — Project how savings or investments grow with compound interest and regular contributions, in both nominal and inflation-adjusted terms.
- Mortgage Calculator — Calculate mortgage payments from price, deposit, rate and term, with total interest, amortisation and the costs beyond principal and interest.
- EMI Calculator — Calculate equated monthly instalments for a loan, with total interest, amortisation breakdown and the effect of prepayment.
- Paycheck / Salary Calculator — Work out net pay per paycheck after tax and deductions, including the extra-paycheck months.
Frequently Asked Questions
Why is the discount rate lower than the actual yield?
Two reasons. The discount rate expresses the gain as a percentage of face value rather than of the price you actually paid, and it uses a 360 day year. Both push the quoted number below the real return.
Which yield should I use to compare against a savings account?
The bond equivalent or investment yield, since that is calculated the same way as deposit rates: on the amount invested, over a 365 day year. Comparing a discount rate against an APY is not a like for like comparison.
Are treasury bills tax advantaged?
In the United States, the interest is exempt from state and local income tax though not federal. In a high tax state that exemption is worth a meaningful amount, which the taxable equivalent yield figure quantifies.
What happens if I sell before maturity?
The price depends on prevailing rates at that moment, so you can receive more or less than the accreted value. Bills are short dated so the price risk is small, but it is not zero, particularly for a 52 week bill.
How does a bill compare to a money market fund?
A fund holds a portfolio of short instruments and its yield floats, while a bill locks a known return to a known date. The fund charges an expense ratio; the bill does not. In a falling rate environment the bill wins, in a rising one the fund adjusts faster.
Privacy & Security
Everything runs in your browser; nothing is uploaded.
How to Use
Enter face value, days to maturity and either the price or the discount rate.
Disclaimer: This tool is provided "as is" without warranty of any kind. Results are for educational and utility purposes.
Related Tools
Compound Interest Calculator
FinanceProject how savings or investments grow with compound interest and regular contributions, in both nominal and inflation-adjusted terms.
Mortgage Calculator
FinanceCalculate mortgage payments from price, deposit, rate and term, with total interest, amortisation and the costs beyond principal and interest.
EMI Calculator
FinanceCalculate equated monthly instalments for a loan, with total interest, amortisation breakdown and the effect of prepayment.