A One-Year Treasury Bill Pays 4.62% and Skips State Tax. Your Best Savings Account Pays 4.34% and Doesn't.

Update, October 6, 2026: The six-month number in the first version of this post is gone. Treasury’s October 5 auction sold the 26-week bill at 4.314%, down from 4.441% a week earlier and now a hair under the best no-strings savings rate, which was still 4.34% on October 5. On raw yield, that’s a tie that tilts to the bank. The bill still wins after state tax, but by less: about $29 on $25,000 in a 5% state, not $44. The one-year bill, which sold at 4.616% on September 29, hasn’t auctioned since and is still the better trade. The headline, the math below and the FAQ are updated to match.

If you’re parking cash for a year, the U.S. Treasury pays more than the best no-strings savings account you can open. And your state can’t tax it.

The one-year Treasury bill sold at a 4.616% yield on September 29. The six-month bill sold at 4.314% on October 5. The best ordinary savings accounts pay 4.25% to 4.34%, and the best one-year CDs pay 4.40%. The national savings average is still 0.37%.

The bills moved faster than the Fed

The Fed raised its target range a quarter point on September 16, to 3.75% to 4%. Treasury bills didn’t wait politely for a quarter point. The six-month bill went from 4.018% at the August 31 auction to 4.441% four weeks later. That’s 0.42 points in a month. Then it gave back 0.13 points in a single week.

Your savings rate is a number the bank can change any morning. A bill’s rate is locked the day you buy it.

Here’s the catch nobody puts in the rate table. Savings and CD interest is taxed by your state. Treasury interest isn’t. TreasuryDirect says it plainly: “No state or local taxes.”

What it’s worth on $25,000

Six months, state income tax of 5%, our math, at the October 5 price. A $25,000 six-month bill costs about $24,474 and pays $25,000 in April. That’s $526. The same $24,474 in a 4.34% savings account earns about $524, or $498 after state tax. The bill wins by about $29, and only because of the tax.

A year is where the gap lives. A $25,000 one-year bill costs about $23,888 and pays $1,112. A 4.40% CD on the same money earns about $1,048, or $996 after state tax. The bill wins by about $116.

Translation: this isn’t life-changing money. It’s about $100 a year on $25,000 for clicking through an auction, more if you live in a high-tax state, and close to nothing on a six-month bill in a state with no income tax.

Your emergency fund stays put. A bill pays at maturity, and getting out early means selling it. Money you might need next month belongs in a high-yield savings account.

Do this

Split your cash. Keep three months of expenses in savings. Put money you won’t touch until next fall in a 52-week bill. A 26-week bill only earns its keep if you pay state income tax, so check the latest auction before you buy one.

Buy at TreasuryDirect. The minimum is $100. Six-month bills auction every week. The next one-year bill auctions October 27, the same day the Fed’s next meeting starts.

Fix your login first. TreasuryDirect passwords stop working October 28, and you’ll need ID.me to get back in.

Run your own numbers in our savings calculator, and compare the current field on our best savings accounts page.

Worth shopping, if the cash can sit.

The fine print

The yields above are Treasury’s “investment rate,” which annualizes the discount. Bills sell below face value and pay face value at maturity. The difference is your interest, and it’s subject to federal income tax. Rates change at every auction.

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