Treasury Bills: Tax Considerations

What Is Taxable Income?

The difference between what you pay for a Treasury bill and the amount we pay you at maturity is interest. This interest is exempt from state and local income taxes.

Keeping Track of Your Taxable Income

For a bill held in TreasuryDirect, you can view your Form 1099-INT online and print it. The form is posted at the beginning of the year, in the year after the bill matures. Also, a record of all taxable transactions is available at any time. To see it, click the “Manage Direct” tab, then under “Manage My Taxes” choose the appropriate year.

NOTE: If a bill in TreasuryDirect matures at the end of a year and we don't issue payment until the first days of the following year, the interest for that bill will be shown on the 1099-INT for the year in which the bill matured, not for the year in which the interest was paid.

Tax Withholding

If you hold a bill in TreasuryDirect, we can ease your tax burden by withholding up to 50 percent of your interest earnings. TreasuryDirect allows you to specify online the percentage you want us to withhold. We transfer your withholdings to the Internal Revenue Service and report the withheld amount on your Form 1099-INT.

Bank, Broker, or Dealer

For tax information regarding a bill you bought through a bank, broker, or dealer, consult the bank, broker, or dealer.