How do I redeem my Treasury bills at maturity?
To redeem your bill in
Redeeming from TreasuryDirect
If you have not told us to reinvest the money from a matured security, we pay you the value of the security automatically on the day the security matures. You don't have to do anything. We deposit the money in your Certificate of Indebtedness (C of I) or your designated bank account.
When the bill matures, you are paid its face value. You can hold a bill until it matures or sell it before it matures.
To sell a bill you hold in TreasuryDirect or Legacy TreasuryDirect, first transfer the bill to a bank, broker, or dealer, then ask the bank, broker, or dealer to sell the bill for you.
- Log into your primary TreasuryDirect® account.
- Click the ManageDirect® tab at the top of the page.
- Under the heading Manage My Securities, click "Redeem securities".
Upon maturity of the T-bills, when will I receive the principal amount? On maturity, the principal amount will be credited to your respective account by the end of the day, typically after 6pm. For cash applications: The principal amount will be credited to your designated Direct Crediting Service bank account.
You can cash paper bonds at a bank or through the U.S. Department of the Treasury's TreasuryDirect website. Not all banks offer the service, and many only provide it if you are an account holder, according to a NerdWallet analysis of the 20 largest U.S. banks.
Interest income from Treasury securities is subject to federal income tax but exempt from state and local taxes. Income from Treasury bills is paid at maturity and, thus, tax-reportable in the year in which it is received.
While interest rates and inflation can affect Treasury bill rates, they're generally considered a lower-risk (but lower-reward) investment than other debt securities. Treasury bills are backed by the full faith and credit of the U.S. government. If held to maturity, T-bills are considered virtually risk-free.
If you want to sell T-bills before maturity, you must hold the asset in TreasuryDirect for at least 45 days before transferring it to your brokerage account.
Is there a penalty for cashing out Treasury bills?
You can sell a T-Bill before its maturity date without penalty, although you will be charged a commission.
You just bought a security from the U.S. Treasury. Securities are generally issued to your account within two business days of the purchase date for savings bonds or within one week of the auction date for Bills, Notes, Bonds, FRNs, and TIPS.
Are Treasury bills taxed as capital gains? Normally no. However, if you buy a T-bill in the secondary market and then achieve a profit, you may be liable for capital gains depending on your exact purchase price.
To redeem your bill in TreasuryDirect you don't need to take action. If you do not provide instructions to deposit the security's principal into your C of I, we deposit the principal into your designated bank account. The deposit is made on the day your security matures.
When a Treasury bond matures – meaning it has reached its maturity date and expires – the investor is paid out the full face value of the bond. So if the bondholder holds a Treasury bond worth $10,000, he or she will receive the $10,000 principal back, as well as earning interest on the investment.
If you invest in TreasuryDirect, your 1099 will be available electronically and you can print the form from your account. 1099 forms are available by January 31 of each tax year.
T-bills pay a fixed rate of interest, which can provide a stable income. However, if interest rates rise, existing T-bills fall out of favor since their return is less than the market. T-bills have interest rate risk, which means there is a risk that existing bondholders might lose out on higher rates in the future.
Key Takeaways
Interest from Treasury bills (T-bills) is subject to federal income taxes but not state or local taxes. The interest income received in a year is recorded on Form 1099-INT. Investors can opt to have up to 50% of their Treasury bills' interest earnings automatically withheld.
Constant maturity is an adjustment for equivalent maturity, used by the Federal Reserve Board to compute an index based on the average yield of various Treasury securities maturing at different periods.
Redeeming bonds is easy - just take them to a local bank or send them to the Bureau of the Fiscal Service. Directions are available on our web site at TreasuryDirect.gov.
When can you redeem Treasury bonds?
You can cash in (redeem) your I bond after 12 months.
Banks and credit unions can redeem savings bonds over the counter.
T-Bill Tax Considerations
The interest income that you may receive from investing in a treasury bill is exempt from any state or local income taxes, regardless of the state where you file your taxes. However, you will need to report interest income from these investments on your federal tax return.
U.S. Treasuries are exempt from state and local income taxes. Most interest income earned on municipal bonds is exempt from federal income taxes.
You can hold a Treasury marketable security until it matures or sell it before it matures. To sell a Treasury marketable security, you must work through a bank, broker, or dealer.
