CD vs Treasury Bills (After-Tax Math by State, 2026)

The top 6-month CD rate from Bread Financial and BMO Alto is 4.30% APY as of May 2026. The 13-week Treasury bill auction yields roughly 4.05% per the latest auction results published at treasurydirect.gov. The 26-week T-Bill yields roughly 4.00%, and the 52-week yields roughly 3.90%. At the long end, the 5-year Treasury note yields roughly 3.85% versus the top 5-year CD at 3.60%, so the comparison flips in favor of Treasuries at the longest maturities even before tax.

Treasury yields are typically 5 to 25 basis points below comparable CDs because banks pay slightly more to attract sticky deposits. The gap narrows at longer maturities (where CDs are less competitive) and widens at shorter maturities (where banks compete aggressively for promotional CDs). In May 2026 the 25 basis point gap on 6-month products is wider than the long-run average, reflecting bank competition for deposits during the Fed cutting cycle.

The headline-yield comparison only matters as the starting point. The actual choice depends on your after-tax yield, which requires layering state and federal income tax on the CD side and federal-only tax on the T-Bill side. The next section shows that math for ten representative states.

The above analysis uses the conservative T-Bill rate (4.05% on the 13-week) and the aggressive top CD rate (4.30%). In practice the CD vs T-Bill gap varies by term. At the 1-year tier the gap is much narrower: 4.20% on the top 1-year CD versus 4.00% on the 52-week T-Bill, a 20 basis point spread. In high-tax states the T-Bill wins at 1 year by an even wider margin than at 6 months.

At the 5-year tier the gap reverses: the top 5-year CD pays 3.60% versus the 5-year Treasury note at roughly 3.85%. The Treasury wins on headline AND wins on state tax exemption, which is rare and worth flagging. If you live in a high-tax state and want long-duration locked yield, the 5-year Treasury note is currently the clean choice over a 5-year CD. See our 5-year CD rate page for the CD side of that comparison.

CDs win on convenience and structure. Opening a CD is a one-step process at most online banks: choose amount, fund via ACH, done. Buying T-Bills requires either a TreasuryDirect account (separate from your bank) or a brokerage account, and the auction timing is slightly less intuitive than CD opening. For savers who place real value on simplicity, the after-tax math may not justify the operational overhead of switching to Treasuries even when the math marginally favors them.

Treasury bills are short-term US government debt with maturities of 4 weeks, 8 weeks, 13 weeks, 17 weeks, 26 weeks, or 52 weeks. They are sold at a discount to face value at weekly auctions and pay face value at maturity. The difference is your interest. A $10,000 face-value 13-week T-Bill purchased at 98.94 means you pay $9,894 today and receive $10,000 in 13 weeks. The $106 gain represents roughly 4.05% annualized yield.

Auctions happen weekly for the 13-week and 26-week, every four weeks for the 52-week, and on rotating schedules for the other tenors. You can place a non-competitive bid through TreasuryDirect or any brokerage, which means you accept whatever yield the auction clears at. Competitive bidding is available for large institutional buyers but rarely makes sense for individual savers. The auction schedule and recent results are published at treasurydirect.gov/auctions/upcoming.

Interest on T-Bills is taxable at the federal level in the year the bill matures. The 1099-INT (or 1099-B if you sold before maturity) arrives by the end of January following the tax year. State income tax does not apply, which is the core advantage versus CDs. Treasury bills are also exempt from local (city, county) income tax in the few jurisdictions where local income tax exists (notably New York City and certain Pennsylvania municipalities).

CDs are insured by the FDIC up to $250,000 per depositor per insured bank per ownership category. The$250,000 limit covers the vast majority of individual saver balances. Above the limit you can spread across multiple banks for additional coverage, use brokered CDs that automatically spread across issuing banks, or use joint accounts and POD beneficiaries to multiply the coverage at a single bank.

Treasury bills are backed by the full faith and credit of the US government with no dollar limit. For very large balances ($1 million plus) this is a meaningful advantage because you do not need to spread across multiple institutions to stay insured. For balances under $250,000 the FDIC coverage on CDs is effectively equivalent to Treasury full-faith backing; both are functionally risk-free for principal.

See our FDIC insurance limits page for the detailed coverage rules including joint accounts, POD beneficiaries, and brokered CD spreading. For balances above $250,000 the choice between brokered CDs (automatic FDIC spreading) and Treasury bills (no limit at all) is partly a question of which administrative pattern you prefer.