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T-Bill vs CD Calculator

Use this T-bill vs CD calculator to see which pays more after tax: it turns a Treasury bill's discount rate into its investment rate, taxes the bill's interest federally only, taxes a CD's interest federally and by your state, and shows the CD yield that would match the bill.

Updated October 8, 2026. Every formula on this page is published below and tested against an independent implementation. Embed on your site

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How the T-bill vs CD calculator compares yields after tax

A Treasury bill is sold below its face value and pays the face value at maturity; the difference is the interest. Bills mature in 4, 6, 8, 13, 17, 26 or 52 weeks and are auctioned at a discount rate. The discount rate understates the return, because it is figured on the face value over a 360-day year, so the Treasury also publishes an investment rate, figured on the price you pay over a 365-day year (366 when the year after the issue date contains February 29). The calculator uses the Treasury's formulas from 31 CFR Part 356:

P=100(1−d×r360)i=100−PP×yrP = 100\left(1 - \frac{d \times r}{360}\right) \qquad i = \frac{100 - P}{P} \times \frac{y}{r}
Price per $100, and the investment rate for bills of a half-year or less
d
Discount rate from the auction
r
Days to maturity
y
Days in the year after the issue date, 365 or 366
i
Investment rate; 52-week bills use the Treasury's quadratic formula instead

For example, a 13-week bill at a 4.200% discount rate costs $98.94 per $100, an investment rate of 4.304%. That investment rate is the figure to compare with a CD's APY.

Then tax. Interest on Treasury bills is subject to federal income tax but exempt from state and local income tax, under 31 U.S.C. § 3124. CD interest is taxed by both. The calculator works out the federal and state tax a year of interest at each yield adds to your other income, using the 2026 federal brackets and your state's tax table, and finds the CD APY that would leave the same after-tax interest as the bill: the tax-equivalent yield.

Worked example: $25,000 in California

A single filer in California with $90,000 of other income has $25,000 to put away for six months. A 26-week bill auctioned at a 4.100% discount rate on October 15, 2026 has an investment rate of 4.245%; a 6-month CD pays 4.300% APY.

A year of interest on $25,000 at each yield, single, California
Treasury billCD
Yield4.245%4.3%
Interest$1,061.23$1,075.00
Federal income tax$233.47$236.50
California income tax$0.00$99.97
After tax$827.76$738.53

The CD's yield is higher, but its interest carries $99.97 of California tax that the bill doesn't, so the bill keeps $89.23 more a year after tax. To match the bill, a CD would need an APY of 4.82%. The bill itself buys $25,500.00 of face value for $24,971.44, since bills are sold in $100 steps, and pays $528.56 of interest at maturity.

Tax-equivalent yield and the state tax exemption on Treasuries

The state tax exemption on Treasuries is worth more where state income tax is higher, and nothing in a state without one. Here is the same bill and CD for the same filer in four states:

Tax-equivalent CD yield for a 4.100% 26-week bill, single, $90,000 of other income
StateState tax on the CD's interestBill after taxCD after taxTax-equivalent CD yield
California$99.97$827.76$738.534.82%
New York$63.43$827.76$775.074.593%
Pennsylvania$33.00$827.76$805.504.419%
Texas$0.00$827.76$838.504.245%

Without state income tax, the comparison comes down to the investment rate against the APY. Local income taxes aren't included; the calculator uses each state's income tax table.

Getting your money out early

Neither is meant to be cashed before it matures. A CD usually charges an early withdrawal penalty; under the Truth in Savings rules, the bank must tell you whether a penalty applies, how it is calculated and when it is charged, so check the account disclosure before you buy. A Treasury bill can be held to maturity or sold before it matures, at whatever price the market pays that day, which can be more or less than you paid plus the interest earned so far.

For money you may need at any time, a high-yield savings account keeps it available; its interest is taxed like a CD's. To see what a rate grows to over several years, use the compound interest calculator.

The bottom line

A Treasury bill can pay less on paper than a CD and still keep more after tax in a state with an income tax. In the example, a 4.245% bill leaves $827.76 a year on $25,000 in California, and a CD would need 4.82% to match it.

Enter the latest auction's discount rate, your state and your income in the T-bill vs CD calculator, and compare the tax-equivalent yield with the CD rates on offer before you lock your money up.

Frequently asked questions

What is the difference between the investment rate vs discount rate on a T-bill?

The discount rate is the auction rate, figured on the face value over a 360-day year. The investment rate is the yield on the price you actually pay over a 365-day year (366 when a leap day falls in the year after issue), so it is always higher and is the one to compare with a CD's APY. A 13-week bill at a 4.200% discount rate has an investment rate of 4.304%.

How is Treasury bill yield calculated?

Treasury bill yield, as an investment rate, is the interest (face value minus price) divided by the price, scaled to a year: (100 − P) ÷ P × y ÷ r, where P is the price per $100, r the days to maturity and y 365 or 366. The price comes from the auction's discount rate: P = 100 × (1 − d × r ÷ 360). For 52-week bills the Treasury uses a quadratic formula, which the calculator follows.

Is T-bill interest exempt from state tax?

Yes. The state tax exemption on Treasuries comes from 31 U.S.C. § 3124: interest on U.S. government obligations is exempt from state and local income tax. It is still subject to federal income tax. CD and savings interest are taxed by both, which is why a bill can come out ahead after tax with a lower yield.

What is a tax-equivalent yield?

Here, the tax-equivalent yield is the CD APY that would leave you the same interest after federal and state tax as the Treasury bill leaves after federal tax alone. If the CDs you can buy pay less than that, the bill keeps more; if they pay more, the CD does. It depends on your state and your income, so the calculator works it out for yours.

How does a CD early withdrawal penalty work?

Each bank sets its own CD early withdrawal penalty. Federal Truth in Savings rules require the bank to disclose whether a penalty will or may be charged, how it is calculated and the conditions for charging it, so read the CD's account disclosure before you buy. A Treasury bill has no penalty, but selling one before maturity happens at the market price.

Sources and further reading

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