Stagger T-bill maturities (4, 8, 13, 17, 26, 52 weeks) for steady income with rolling reinvestment. Computes expected monthly cash, weighted yield, and state-tax-free advantage.
Detailed instructions, formula notes, and US-context guidance shown in the calculator above.
Disclaimer: Estimate only. Consult a qualified professional for decisions with major financial, legal, or health consequences.
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Calculator information
📋 How to use this calculator
- Enter total amount to invest in the T-bill ladder.
- Select ladder structure (4 weekly, 13/26/52 weekly, or custom).
- Set expected yield based on current Treasury auction rates.
- Choose state for state income tax savings calculation (T-bill interest exempt from state tax).
- Review monthly cash flow, weighted yield, and after-tax yield equivalence vs CDs.
🧮 Treasury Bill Ladder Yield + State Tax Advantage
After_state_tax_equivalent = T_bill_yield / (1 - State_tax_rate)
- T-bills sold at discount, mature at face value (discount yield)
- Maturities: 4, 8, 13, 17, 26, 52 weeks
- Interest EXEMPT from state + local income tax (full federal taxable)
- Ladder: equal amounts at staggered maturities, roll each maturing one to longest rung
- Monthly income = (Total / Number_of_rungs) x Yield
TreasuryDirect.gov for direct purchase (no fees, $100 min). Brokerage T-bills (Fidelity, Schwab) usually have small markup but easier ladder management + reinvestment. SGOV (iShares 0-3mo) and BIL ETFs offer T-bill exposure with daily liquidity at small expense ratio (~0.07%).
💡 Worked example: $120K ladder, 6-rung (4-26-week), 4.3% yield, California resident
Given:- Investment: $120,000
- 6 rungs of $20,000 each
- Maturities: 4, 8, 13, 17, 26, 52 weeks
- Weighted yield: 4.3%
- California state tax rate: 9.3%
Steps:- Annual interest: $120,000 x 4.3% = $5,160
- Federal tax (24% bracket): $5,160 x 24% = $1,238
- California state tax: $0 (T-bills exempt)
- Equivalent CA-taxable yield for same after-tax: 4.3% / (1 - 9.3%) = 4.74%
- A 4.74% CD would be needed to match — much rarer than 4.3% T-bill
Result: $5,160 gross interest, no state tax. Effective yield equivalent to a 4.74% CD for a Californian. Monthly cash flow ~$430 as each rung matures and rolls.
❓ Frequently asked questions
Why are T-bills better than CDs for high-tax-state residents?
T-bill interest is exempt from state and local income tax (federal law). CD interest is fully taxable everywhere. For a Californian (9.3%) or NY/NJ resident (8-10.9%), this is significant: a 4.3% T-bill ≈ 4.74% CD pre-tax. For someone in Texas/Florida (0% state), the advantage shrinks. Plus T-bills are backed by full faith and credit of the US government (CD is FDIC-insured only up to $250K).
TreasuryDirect.gov vs my brokerage — where should I buy?
TreasuryDirect: no fees, direct from Treasury, but clunky UX (no batch laddering, hard-to-use platform). Brokerage (Fidelity, Schwab): small markup (1-5 basis points), easier ladder management, can reinvest automatically. For ladders with frequent reinvestment: brokerage. For buy-and-hold individual issues: TreasuryDirect. Marginal cost difference is minimal at typical ladder sizes.
What's the difference between T-bills, T-notes, and T-bonds?
T-bills: 4 weeks to 52 weeks maturity, sold at discount, no coupon. T-notes: 2-10 years, semi-annual coupon payments. T-bonds: 20-30 years, semi-annual coupon. ALL three are exempt from state tax. Longer maturities have interest rate risk (price falls if rates rise). For ladders prioritizing capital preservation, T-bills are safest. For income with rate-lock, T-notes 2-3 year are common.
Should I use SGOV or BIL ETFs instead of building my own ladder?
ETFs offer convenience (daily liquidity, no manual reinvestment) at ~0.07% expense ratio (SGOV) — basically free. Tracking error vs direct T-bill: minimal for SGOV/BIL. Use ETFs if you want flexibility to add/remove funds. Use direct T-bills if you want to lock-in known yield to specific dates (e.g., 'I need $20K on Feb 15, 2027 for tax payment'). Tax treatment identical.
What happens if rates drop?
Each rung you reinvest at maturity locks in the THEN-CURRENT yield, not your original 4.3%. A ladder spreads reinvestment risk: not all of it gets re-priced at once. If rates drop to 3.5% over 6 months, your 26-week rung still earns 4.3% until maturity, then reinvests at 3.5%. Average yield gradually declines toward 3.5% over the next year. Inverse of building the ladder when rates were rising.
📚 Sources & references
Last updated: May 23, 2026