Compare Treasury bills, notes and bonds on maturities, current yields as of late August 2026, and federal tax treatment for investors.
When comparing treasury bills vs notes vs bonds, investors need to understand differences in maturities, yields, and federal tax treatment to choose the right instrument for their goals.
U.S. Treasury bills, notes, and bonds are direct obligations of the U.S. government. Treasury bills function as discount instruments. They are sold below face value, typically in $100 multiples, and carry no coupons. The investor earns the difference between the discounted purchase price and the face value repaid at maturity, which constitutes the interest income.
Treasury notes and bonds operate differently. These are coupon-paying securities that deliver semiannual interest payments and are redeemed at full face value on the maturity date. The coupon structure creates a steady income stream throughout the holding period rather than a single payment at the end.
Despite these structural distinctions, all three securities follow identical minimum issuance standards. They are offered in $100 increments and backed by the full faith and credit of the federal government. This common framework simplifies access for investors while preserving uniform credit quality across the product suite.
Issuance mechanics reflect the design differences. Bills are auctioned at a discount with the yield determined solely by the price spread to par. Notes and bonds are typically issued at or near par, with the coupon rate established through the auction process to match prevailing market conditions.
U.S. Treasury bills follow fixed short-term maturity buckets of 4 weeks, 8 weeks, 13 weeks, 26 weeks, or 52 weeks. These maturities align with the government’s need for frequent, predictable cash management. Bills reach investors through regular auctions that occur weekly for the most common tenors and on an as-needed basis for others.
Treasury notes cover the intermediate segment, with maturities running from at least 1 year up to 10 years. The Treasury schedules note auctions on a predictable monthly and quarterly cycle that matches the volume of financing required in each segment. Notes are typically issued in denominations from $100 to $1 million.
Treasury bonds occupy the longest end of the curve, with maturities generally longer than 10 years. Like notes, bonds follow established monthly and quarterly auction schedules that allow the Treasury to roll over or extend its long-term debt in an orderly manner. The same $100 to $1 million denomination range applies.
These issuance rhythms have remained consistent through 2026, with no material changes reported in official Treasury practices as of September 2026. The combination of weekly bill auctions and less frequent note and bond auctions gives the Treasury flexibility across different debt horizons while keeping secondary-market liquidity high in each maturity bucket.
Treasury bills use discount-basis quotes that annualize the price discount from face value over a 360-day year. Notes and bonds instead rely on constant-maturity yields, which interpolate rates to fixed tenors for consistent curve comparisons.
The Federal Reserve H.15 release for the week ending August 31, 2026, listed the 6-month bill secondary market rate at 3.89 percent on a discount basis. Constant-maturity yields for the same period showed the 10-year at 4.75 percent and the 30-year at 5.25 percent.
Market data aligned to Treasury methodology on September 1, 2026, placed 3-month bills in the 3.78–3.92 percent range. The 10-year constant maturity stood near 4.79 percent and the 30-year at 5.27 percent. These readings capture the prevailing spread between short-term discount instruments and longer-term coupon securities under then-current conditions.
U.S. Treasury bills, notes, and bonds generate interest income that is uniformly subject to federal income tax while remaining exempt from state and local income taxes. The IRS treats the discount on bills as interest income and taxes the semiannual coupon payments on notes and bonds in the same manner.
Investors receive Form 1099-INT with the interest amount reported in box 3. For Treasury bills, which are issued at a discount, the full difference between purchase price and face value is recognized as taxable interest only when the bill matures and the proceeds are paid. Notes and bonds, by contrast, require reporting of each semiannual interest payment in the calendar year it is actually received.
This creates a clear timing distinction: bill holders defer tax recognition until maturity, while note and bond holders must include interest on their returns as it is paid. The rules follow the guidance in IRS Publication 550 with no material changes identified through September 2026.
The table below compares Treasury bills, notes, and bonds on maturity, coupon structure, yield quotation, tax timing, and July 2026 debt aggregates from the Monthly Statement of the Public Debt.
| Feature | Treasury Bills | Treasury Notes | Treasury Bonds |
|---|---|---|---|
| Maturity | 4-, 8-, 13-, 26-, or 52-week | 1–10 years | Greater than 10 years |
| Coupon Structure | Issued at discount; no periodic payments | Semiannual coupon payments | Semiannual coupon payments |
| Yield Quotation Method | Secondary-market discount basis | Constant maturity | Constant maturity |
| Tax Timing | Interest reported at maturity | Interest reported in year paid | Interest reported in year paid |
| Outstanding Debt Share (July 2026) | Within $6.99 trillion short-term total | Within $24.47 trillion long-term total | Within $24.47 trillion long-term total |
Short-term debt (one year and less) stood at approximately $6.99 trillion while long-term debt exceeded $24.47 trillion on July 31, 2026.
Treasury securities are issued in $100 multiples. Notes and bonds are typically available in denominations from $100 to $1 million, allowing investors to start with small positions that scale with auction allocations.
Bills trade actively for short-term needs through dealer networks. Notes and bonds maintain liquidity via established secondary markets, though turnover depends on remaining maturity and overall marketable debt levels reported in the Monthly Statement of the Public Debt.
Bills bought at discount recognize the full difference between purchase price and face value as interest at maturity. Notes and bonds follow IRS amortization rules for any premium paid or discount accreted over the remaining term, with adjustments reported annually where applicable.
Each generates a Form 1099-INT with interest shown in box 3. Bills are reported when the discount is paid at maturity. Notes and bonds report semiannual interest in the calendar year it is actually paid.
Interest on bills, notes, and bonds is exempt from state and local income taxes while remaining fully subject to federal income tax, regardless of whether the security was held to maturity or sold earlier.
Secondary-market sales may produce capital gains or losses separate from the interest shown on Form 1099-INT. The original issue discount on bills continues to be treated as interest when the instrument matures for the new holder.
