Treasury bills and treasury bonds are both IOUs from the same borrower, the US government, but the length of the loan changes almost everything else about how they behave. Bills are the short end of the curve, bonds are the long end, and treasury notes fill the middle. The choice between them is really a choice about how long you are willing to lock up money and how much price swing you can tolerate along the way. This is general information, not investment advice — verify current yields and terms before buying.
What changed in 2026
- Short-term treasury yields remained a genuine competitor to savings accounts and CDs, keeping bills popular with investors who want safety without locking up cash for years.
- The yield curve shape kept shifting, so the historical assumption that longer maturities always pay more has not reliably held — check the current curve rather than assuming.
- More brokerages made buying treasuries directly, commission-free, a one-click process, reducing the old advantage that treasury bond funds had purely on convenience.
The three flavors of treasury debt
- Treasury bills (T-bills) — maturities of four weeks to one year, sold at a discount to face value; the difference between purchase price and face value is your return, with no separate coupon payment.
- Treasury notes (T-notes) — maturities of two to ten years, paying a fixed coupon every six months, redeemed at face value at maturity.
- Treasury bonds (T-bonds) — maturities of 20 or 30 years, also paying a semiannual coupon, carrying the most interest rate sensitivity of the three.
Why maturity changes the risk
A treasury security's price moves opposite to interest rates before maturity: when rates rise, the price of an existing bond falls, because new issues now pay more. The longer the maturity, the bigger that price swing for a given rate change. A one-year bill barely moves; a 30-year bond can lose a meaningful chunk of value if rates jump, even though the government will still pay it back in full at maturity if you hold to the end.
Comparing bills, notes, and bonds
| Feature |
T-Bill |
T-Note |
T-Bond |
| Maturity |
4 weeks-1 year |
2-10 years |
20-30 years |
| Coupon |
None (sold at discount) |
Semiannual fixed |
Semiannual fixed |
| Price volatility |
Low |
Moderate |
High |
| Typical use |
Cash parking, short ladders |
Core fixed income |
Long-term income, duration bets |
Choosing between them
If the goal is a place to park cash you might need within a year, bills are the straightforward fit — you know almost exactly what you will have and when. If the goal is locking in income for a decade or more, notes and bonds do that, at the cost of price swings if you need to sell early. Many investors ladder across maturities rather than picking one, which is the same logic behind a brokerage CD ladder — spreading maturities so something is always coming due.
FAQ
Which pays more, a bill or a bond?
It depends entirely on the current yield curve, which changes constantly. Sometimes short rates exceed long rates (an inverted curve); check current published yields rather than assuming.
Are treasury bonds riskier than treasury bills?
Not in terms of default risk — both carry the same government backing. Bonds carry more price risk if you need to sell before maturity.
Do I pay state tax on treasury interest?
Generally no, interest on treasuries is exempt from state and local income tax, though federal tax still applies. Confirm with a tax professional for your situation.
Can I buy these without a broker?
Yes, directly through the TreasuryDirect government website, or through most brokerage accounts alongside other securities.
Where to go next
For more on fixed income choices, see corporate bonds vs treasuries, what is a zero-coupon bond, and what is a brokerage CD.