What are Treasury bills, notes and bonds, and how do they differ?

What are Treasury securities?#

Investor.gov defines Treasury securities — including Treasury bills, notes and bonds — as debt obligations issued by the U.S. Department of the Treasury^[1]. Buying one means lending money to the U.S. federal government. They are considered among the safest investments because they are backed by the full faith and credit of the U.S. government^[1].

The Treasury sells these marketable securities through an auction process that also sets their rate or yield^[2]. The Treasury's debt managers describe their goal as funding the government at the least cost to the taxpayer over time, and say Treasury acts as a regular and predictable market participant, not a market timer^[3]. After an auction, the securities can be bought and sold through broker-dealers on the secondary market, as with other bonds^[4].

If the word bond is new to you, start with what a bond is. This page assumes you know what a coupon and a maturity date are.

How do bills, notes and bonds differ?#

The names describe how long the loan lasts. The St. Louis Fed's glossary defines a Treasury bill as a security with an original maturity of no more than one year, a Treasury note as a fixed-rate, interest-bearing security with an original maturity of more than one year but not more than 10 years, and a Treasury bond as a fixed-rate, interest-bearing security with an original maturity of more than 10 years^[5].

The Treasury's own debt-management overview uses the same split — bills under one year, notes from one to 10 years, bonds over 10 years — and lists TIPS in 5-, 10- and 30-year maturities and FRNs with a 2-year maturity^[3]. A New York Fed FAQ on rolling over the Fed's own maturing Treasury holdings (effective October 29, 2025) refers to 4-, 6-, 8-, 13-, 17-, 26- and 52-week bills^[6].

How do you actually earn money on each one?#

Bills pay no coupon. You buy a bill for less than its face value and receive the full face value when it matures. A Richmond Fed publication on Treasury bills describes the discount as the difference between the face value and the purchase price, and calculates the yield on a discount basis by dividing that discount by the face value and expressing the result at an annual rate, using a 360-day year^[8].

Notes and bonds are fixed-rate, interest-bearing securities^[5]: they pay a coupon on a schedule — FINRA notes bond coupons are usually paid twice a year^[4] — and return the face value at maturity.

TIPS (Treasury Inflation-Protected Securities) work differently. Treasury Fiscal Data explains that a TIPS's principal fluctuates with inflation and deflation, tied to the Consumer Price Index; the interest rate is fixed, but the amount of interest paid every six months can vary as the principal changes^[7]. When TIPS mature, the maturing principal includes the inflation adjustment^[6]. Our note on how inflation affects investments explains why that matters.

What were Treasury yields in 2026?#

The Federal Reserve publishes daily Treasury yields in its H.15 release. Its constant-maturity yields are read from the yield curve at fixed maturities, so there is a 10-year figure even if no security has exactly 10 years left^[9]. The figures below are from the release dated October 2, 2026, for October 1, 2026^[9]. They change every day, so treat them as a snapshot, not a quote.

On that date the 30-year yield was 1.44 percentage points — 144 basis points — above the 3-month yield. Lining these yields up by maturity gives a yield curve, which Investor.gov describes as a graph of yields across maturities from three months to 30 years^[10]. Read more in yield curve explained.

Are Treasuries risk-free?#

Not entirely — it depends which risk you mean. On default, FINRA says Treasury securities are generally deemed free of default risk^[4], and a St. Louis Fed article notes they are widely regarded as the safest investments because they lack significant default risk^[11].

On price, they are not. The SEC states that interest rate risk is common to all bonds, even U.S. Treasury bonds^[12]. The longer the maturity, the more a rate rise can cut the price of a Treasury sold before it matures — see why bond prices fall when rates rise. Inflation is a third risk: Investor.gov notes that inflation reduces purchasing power, a risk for investors receiving a fixed rate of interest^[13]. TIPS respond to that by adjusting their principal with the Consumer Price Index^[13].

How are Treasuries taxed in the U.S.?#

Investor.gov notes that income from Treasury securities may be exempt from state and local taxes, but not from federal taxes^[1]. That can matter when comparing a Treasury with a corporate or municipal bond; the what is a bond page compares the three families. This is the U.S. treatment only — rules differ by country, and your own situation may change the answer.

What mistakes do beginners make?#

1. Comparing a bill's discount with a note's coupon directly

   A bill's return comes from its discount, not a coupon. Convert both to a yield before you compare them.

2. Assuming a long Treasury is a safe place for short-term money

   Default risk is low, but a long bond's price can fall sharply if rates rise. Money needed soon is exposed to that price risk if it must be sold early.

3. Treating one day's yield as a fixed rate

   Published yields change daily. Check the date on any yield figure, including the ones on this page.

4. Thinking TIPS never lose value

   TIPS principal falls with deflation as well as rising with inflation, and TIPS prices also move with interest rates if sold before maturity.