Yes, $500 bills are still legal tender in the United States, and every note ever issued remains valid at its full $500 face value. Federal law makes no distinction between currency still in production and currency retired decades ago. The practical question is different: because most surviving $500 notes are worth well above face value to collectors, spending or depositing one at a bank is almost always a money-losing move.
The Law Behind the $500 Bill
Under 31 U.S.C. ยง 5103, all United States coins and currency, including Federal Reserve notes, are legal tender for all debts, public charges, taxes, and dues.1Office of the Law Revision Counsel. 31 USC 5103 – Legal Tender The statute draws no line based on denomination or printing date. A 1934 $500 Federal Reserve Note carries the same legal weight as a $20 bill printed last year.
Official policy backs this up. All designs of Federal Reserve notes remain legally valid for payments regardless of when they were issued, covering every denomination from 1914 to the present.2USCurrency.gov. Acceptance and Use of Older-Design Federal Reserve Notes Unlike some countries that periodically invalidate older banknotes, the United States has never demonetized any of its paper currency.
The $500 bill was discontinued in 1969 due to lack of use, alongside the $1,000, $5,000, and $10,000 notes. The last actual printing run happened in 1945, so every surviving $500 bill is at least 80 years old.3Bureau of Engraving and Printing. Historical Currency Discontinued does not mean invalid. It just means no new ones are being printed.
Can a Business Refuse a $500 Bill?
Yes. Legal tender status does not force a private business to accept any particular form of cash. Stores are free to set their own payment policies unless a state law says otherwise.4Federal Reserve. Is It Legal for a Business in the United States to Refuse Cash as a Form of Payment In practice, a cashier who has never seen a $500 bill, cannot verify it, and cannot make change for it will decline to take it.
The legal tender designation carries real force in two narrower situations: paying a debt that is already owed, such as a court judgment or a tax bill, and depositing the note at a bank. For a coffee or a tank of gas, the bill’s legal status is beside the point.
What a $500 Bill Is Actually Worth
This is where the answer changes the decision. Even a well-circulated $500 bill in average condition typically sells for $800 to $1,200 on the collector market. Notes in better condition, from scarcer issuing banks, or with unusual serial numbers climb well above that range. Uncirculated examples from certain Federal Reserve districts have sold for $10,000 to $40,000 or more.
Several factors drive the price:
- Series year. The 1928 series is generally scarcer than the 1934 series, and the 1934A sub-series is the most common of the three.
- Issuing district. Each note carries a Federal Reserve Bank seal identifying the city of origin. Notes from smaller districts like Dallas or Minneapolis were printed in lower quantities and command higher premiums.
- Physical condition. Crispness, centering, ink vibrancy, and the absence of folds, tears, or pinholes all matter. Professional grading services use a 70-point numerical scale, and the gap between a mid-grade and a gem uncirculated example can be tens of thousands of dollars.5PCGS. PCGS Banknote Grading Standards
- Serial number. Low serial numbers, “star” replacement notes, and certain prefix-suffix combinations carry additional premiums.
Depositing a $500 bill at a bank for face value is like selling a gold coin for its weight in metal. You’ll get something, but you’ll almost certainly lose money.
Gold Certificates Are Different
Not every $500 bill is a standard green-seal Federal Reserve Note. The government also issued $500 gold certificates, distinguished by a gold Treasury seal and, on large-size notes, orange backs. These are considerably rarer and carry steep collector premiums.
Private ownership of gold certificates was banned in 1933 during the gold recall. That restriction was lifted by a Treasury memo in April 1964, so collectors can legally buy, sell, and hold gold certificates today. They too remain legal tender at face value.2USCurrency.gov. Acceptance and Use of Older-Design Federal Reserve Notes
How to Identify What You Have
Before talking to a dealer, pull a few details off the note. The series year is printed near the portrait and tells you whether you have a 1928, 1934, or 1934A note. On the left side of the face, the Federal Reserve Bank seal contains a letter identifying the issuing district (for example, “B” for New York, “L” for San Francisco). That same letter is the first character of the serial number, printed in the upper right and lower left.
Check the seal color. Green means a standard Federal Reserve Note. Gold or orange means a gold certificate, which is significantly rarer.
Handle the note carefully, because condition drives value. Do not fold, clean, or tape it. Place it in a rigid protective holder if you plan to transport it, and take clear photographs of both sides under even lighting so you can share them with dealers before an in-person visit.
How to Sell or Redeem It
Selling to a Dealer or Auction House
For most owners, a reputable numismatic dealer is the fastest way to get a fair price. Ask for a written appraisal and get quotes from more than one dealer, since buy prices vary. For an exceptional note or one from a scarce district, a major auction house may bring a higher return, though auction houses charge a seller’s commission. Having the note professionally graded and encapsulated before selling adds credibility with buyers and can meaningfully increase the sale price.
Depositing at a Bank
You can walk into any commercial bank and deposit a $500 bill at face value. The bank will credit your account $500 and typically forward the note to the Federal Reserve, where it is removed from circulation and destroyed.6Federal Reserve. Which Denominations of Currency Does the Federal Reserve Issue It is legal and simple. It is also almost always the wrong financial choice. A bank manager may pause on the transaction because these notes are so rare, but there is nothing suspicious about depositing legal U.S. currency.
Redeeming a Damaged Note
If your $500 bill is damaged by fire, water, or decay, the Bureau of Engraving and Printing runs a mutilated currency redemption program. To receive face value, clearly more than 50% of the note must be present along with sufficient remnants of any security features. If 50% or less remains, the BEP may still redeem it, but only if you can show the missing portions were completely destroyed.7Bureau of Engraving and Printing. Mutilated Currency Redemption The BEP redeems at face value only. A damaged note that might have brought $2,000 from a collector will bring $500 through this program, so weigh your options before mailing it.
Taxes When You Sell Above Face Value
Selling a $500 bill for more than $500 creates a taxable event. The IRS treats paper currency sold at a premium the same way it treats coins and art. Hold the note for more than one year and any profit above your cost basis is taxed as a collectibles gain at a maximum federal rate of 28%, which is higher than the standard long-term capital gains rate on stocks and real estate.8Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed Hold it for a year or less and the gain is taxed as ordinary income at your regular rate.
Your cost basis depends on how you got the note. If you bought it, your basis is the purchase price. If you inherited it, the basis is generally stepped up to the fair market value on the date of the decedent’s death. If you found it among a relative’s belongings with no purchase records, your basis is the $500 face value, meaning you owe tax on everything above that when you sell.