T-Bills vs. High-Yield Savings Accounts: Which Is Better for Your Cash?
Compare Treasury bills and high-yield savings accounts on yield, taxes, safety and access, with today's T-Bill rate and a free after-tax calculator.
Both Treasury bills and high-yield savings accounts are safe places to earn interest on cash. The best choice depends on three things: the rates on offer today, your state income tax rate, and how quickly you might need the money.
Right now, the 3-month T-Bill rate is 4.09% on a discount basis (October 13, 2026). Compare that with the APY your bank offers, then use the calculator at the end of this page to see which comes out ahead after taxes.
Side-by-side comparison
| Treasury bills | High-yield savings account | |
|---|---|---|
| Who backs it | U.S. government | FDIC insurance up to $250,000 per depositor, per insured bank, per ownership category |
| Rate | Fixed until maturity | Variable; can change any day |
| Access to money | At maturity (4–52 weeks), or sell early via a brokerage | Any time, usually with a quick transfer |
| Federal tax | Yes | Yes |
| State and local tax | Exempt | Taxed |
| Minimum | $100 | Often $0 |
| Effort | Buy, then roll over or redeem | Open the account and deposit |
When T-Bills tend to win
- You live in a high-tax state. Because T-Bill interest is exempt from state and local income tax, it can beat a savings account even with a slightly lower headline rate. For someone paying 9% state tax, the difference can be meaningful.
- You expect rates to fall. A T-Bill locks in today’s rate until it matures, while a savings APY usually drops soon after the Federal Reserve cuts rates.
- You have a known future expense. Saving for a tax bill, tuition payment or home down payment in six months? A T-Bill that matures just before you need the money is a natural fit.
- You have more than $250,000 in cash. Bank deposits above FDIC limits aren’t insured; T-Bills have no such cap.
When a high-yield savings account tends to win
- It’s your emergency fund. You can’t predict emergencies, so instant access matters more than a small difference in yield.
- You live in a state with no income tax. Without the state tax advantage, a competitive savings APY may match or beat T-Bills.
- You want simplicity. No auctions, maturities or rollovers to manage.
- Your bank is paying a promotional rate that’s higher than current T-Bill yields. Just check how long the promotion lasts.
How to compare fairly
- Use the right T-Bill number. The rate usually quoted for T-Bills is on a discount basis, which understates the return. Our calculator converts it to an investment yield that can be compared with an APY.
- Compare after-tax returns, not headline rates. The calculator’s “APY needed to match” result tells you the savings rate you’d need to equal T-Bills after taxes.
- Think about rate changes. A savings APY is a snapshot. The Fed’s benchmark rate is currently 3.88%, and bank rates tend to move with it.
You don’t have to choose just one
Many savers split their cash:
- 1–3 months of expenses in a high-yield savings account for instant access.
- The rest in T-Bills or a Treasury money market fund, often in a “ladder” where bills mature every few weeks, so some money is always becoming available.
Key takeaway: For money you might need tomorrow, a high-yield savings account is hard to beat. For money you won’t touch for a few months, especially in a high-tax state, T-Bills often earn more after taxes.
Run your own numbers below. The T-Bill yield is pre-filled with the latest official rate.
Sources
This content is for educational purposes only and isn't financial, tax or investment advice. Rates change daily; confirm current terms with your bank, broker or TreasuryDirect before making decisions. See our full disclaimer.