Treasury bill

Treasury bills (T-bills) are short-term U.S. government debt securities typically issued for terms ranging from four weeks to 52 weeks and are sold at a discount to their face value.

T-bills are sold in denominations starting at $100 and can be purchased through auctions conducted by the U.S. Treasury or via brokerage firms. They do not pay periodic interest; instead, the return on investment comes from the difference between the purchase price and the face value received at maturity. Upon maturity, the purchaser receives the full face value of the T-bill. For example, if you buy a T-bill for $9600, you will receive $10,000 at maturity, with a $4000 gain at face value less inflation during the holding period. The gain on T-bills is subject to federal income tax, but is exempt from state and local taxes.