Treasury products are debt securities the U.S. government sells to fund its operations, and they come in more variety than most people realize. The lineup runs from bills that mature in as little as four weeks to bonds that pay interest for 30 years, along with inflation-protected securities, floating rate notes, and two kinds of savings bonds. Every one of them can be purchased for as little as $100. The Bureau of the Fiscal Service, part of the Department of the Treasury, handles their issuance and administration.
Bills, Notes, and Bonds
These three form the core of what the Treasury calls marketable securities, meaning you can resell them to other investors on the secondary market before they mature. All three require a minimum purchase of $100, with $100 increments after that.1TreasuryDirect. Buying a Treasury Marketable Security What separates them is maturity and how they pay you.
Treasury bills are the shortest option. T-bills mature in 4, 6, 8, 13, 17, 26, or 52 weeks and pay no periodic interest. You buy them at a discount and receive the full face value at maturity, and the difference is your return.2TreasuryDirect. Treasury Bills
Treasury notes carry maturities of 2, 3, 5, 7, or 10 years. They pay interest every six months at a fixed rate.3eCFR. 31 CFR Part 356 – Sale and Issue of Marketable Book-Entry Treasury Bills, Notes, and Bonds
Treasury bonds are the longest, currently issued with 20-year and 30-year maturities. Like notes, they pay interest every six months at a fixed rate.3eCFR. 31 CFR Part 356 – Sale and Issue of Marketable Book-Entry Treasury Bills, Notes, and Bonds
Because these securities trade on the secondary market, you aren’t locked in until maturity. A 10-year note can be sold after two years if you need the cash. The price you get, though, depends on where interest rates stand at the time.
TIPS and Floating Rate Notes
Two specialized marketable securities handle risks that fixed-rate bonds can’t address on their own.
Treasury Inflation-Protected Securities, or TIPS, guard against inflation. The Treasury adjusts the principal up or down based on changes in the Consumer Price Index.4TreasuryDirect. TIPS – TreasuryDirect The interest rate stays fixed, but because it applies to the adjusted principal, each semiannual payment grows in dollar terms when prices rise. TIPS are issued in 5-year, 10-year, and 30-year terms. When inflation stays low, they tend to underperform conventional bonds; the payoff shows up during periods of unexpected inflation.
Floating Rate Notes, or FRNs, take a different route. Instead of adjusting principal, they adjust the interest rate. The rate resets weekly based on the highest accepted discount rate from the most recent 13-week T-bill auction, plus a fixed spread set when the note is first sold.5TreasuryDirect. Floating Rate Notes (FRNs) Interest is paid quarterly. FRNs mature in two years and are useful for investors who want short-term exposure without repeatedly rolling over T-bills.
Series EE and Series I Savings Bonds
Savings bonds work differently from marketable securities. They’re registered to you personally, can’t be resold to another investor, and are bought and redeemed through the Treasury itself.
Series EE bonds earn a fixed interest rate set at purchase. Bonds issued from November 2025 through April 2026 earn a fixed annual rate of 2.50%.6TreasuryDirect. Fiscal Service Announces New Savings Bonds Rates That rate on its own is modest, but EE bonds come with a distinctive guarantee: the Treasury will make up any shortfall needed to double the bond’s value after 20 years.7TreasuryDirect. EE Bonds Held for the full 20 years, that guarantee creates an effective floor return of roughly 3.5% annualized, regardless of the stated fixed rate.
Series I bonds combine a fixed rate with a variable inflation rate that resets every six months based on changes in the Consumer Price Index.8eCFR. 31 CFR Part 359 – Offering of United States Savings Bonds, Series I The composite rate for I bonds issued from November 2025 through April 2026 is 4.03%, made up of a 0.90% fixed rate plus a 1.56% semiannual inflation rate.9TreasuryDirect. I Bonds Interest Rates The fixed part stays the same for the life of the bond; the inflation part resets every May and November.
EE and I bonds share the same restrictions. You can buy up to $10,000 in electronic bonds of each type per person per calendar year.10TreasuryDirect. I Bonds – TreasuryDirect You must hold them at least 12 months before redeeming, and cashing out within the first five years costs you the last three months of interest.8eCFR. 31 CFR Part 359 – Offering of United States Savings Bonds, Series I The Treasury used to let taxpayers buy paper I bonds with their federal tax refund using IRS Form 8888, but that program was discontinued on January 1, 2025.11TreasuryDirect. Using Your Income Tax Refund to Buy Paper Savings Bonds
How the Interest Is Taxed
Interest from every Treasury security is subject to federal income tax but exempt from state and local income taxes. The exemption is set by federal statute and covers any form of state or local taxation that would require counting the interest in computing a tax.12Office of the Law Revision Counsel. 31 USC 3124 – Exemption From Taxation For investors in high-tax states, that meaningfully improves the after-tax yield compared with a corporate bond or CD at the same nominal rate.
With marketable securities, you report interest in the year you receive it. For savings bonds, you can choose: report interest annually as it accrues, or defer reporting until you cash the bond or it matures.13TreasuryDirect. Tax Information for EE and I Bonds Most people defer, which means no tax paperwork until redemption. When you cash out, the Treasury issues a 1099-INT for any interest of $10 or more.14Internal Revenue Service. About Form 1099-INT, Interest Income
Education Exclusion for Savings Bonds
If you use savings bond interest to pay for qualified higher education expenses, you may be able to exclude that interest from federal tax entirely. The exclusion applies to Series EE bonds issued after 1989 and to all Series I bonds. The bond owner must have been at least 24 years old at the time of issue, and the expenses must go toward tuition and fees at an eligible institution. Room and board don’t qualify.15Internal Revenue Service. Publication 970 – Tax Benefits for Education
The exclusion phases out at higher incomes. For tax year 2025, it starts shrinking when modified adjusted gross income exceeds $99,500 for single filers or $149,250 for joint filers, and disappears entirely at $114,500 and $179,250 respectively.15Internal Revenue Service. Publication 970 – Tax Benefits for Education The thresholds are adjusted for inflation each year, so check the current figures. Married filing separately isn’t allowed to claim it.
How to Buy Treasury Products
The most direct route is a free account at TreasuryDirect.gov, the Treasury’s online portal for individual investors. You’ll need a Social Security Number or Employer Identification Number, a U.S. address, a checking or savings account with routing and account numbers, and an email address.16TreasuryDirect. Open an Account – TreasuryDirect Businesses, trusts, and other entities can open accounts too, though the registration is more involved and requires someone authorized to act for the entity.17eCFR. 31 CFR 363.20 – Forms of Registration Available for Purchases Through TreasuryDirect
New marketable securities are sold through regularly scheduled auctions. Individual investors almost always submit a noncompetitive bid, which guarantees you’ll receive the amount you requested at whatever yield the auction sets. You can bid noncompetitively for up to $10 million per auction.18eCFR. 31 CFR 356.12 – Types of Bids and Specific Requirements or Restrictions On the settlement date, TreasuryDirect debits your linked bank account, and the securities appear as electronic book-entry records.19eCFR. 31 CFR 357.0 – Book-Entry Systems No paper certificates are mailed. Savings bonds don’t go through auctions; you can buy them any time at a set price.
TreasuryDirect isn’t the only option, and for many investors it isn’t the best one. Banks and brokerages also sell marketable Treasuries, and most major brokerages charge no commission for online Treasury purchases. Buying through a brokerage lets you hold Treasuries alongside stocks and funds in one account, and it gives you access to the secondary market, where you can buy notes and bonds issued months or years earlier. TreasuryDirect only sells new issues.
The brokerage route also matters for retirement accounts. You can’t buy through TreasuryDirect and hold the securities in an IRA. To put T-bills, notes, bonds, TIPS, or FRNs into an IRA, you need a brokerage that supports Treasury purchases inside its retirement accounts. I bonds can’t be held in an IRA at all, because Treasury registration rules require the bond to be held by a named individual rather than a retirement trust.
Selling Before Maturity
Hold any Treasury security to maturity and you’ll get back exactly the face value. The federal government’s credit backs that promise, which is why Treasuries are considered among the safest investments available. The risk shows up when you need to sell a marketable security early.
Bond prices and interest rates move in opposite directions. When rates rise after you buy, your older security with its lower coupon becomes less attractive to other buyers and its market price drops. When rates fall, the opposite happens and the security is worth more. A 10-year note bought at $1,000 face value could trade at $925 or $1,082, depending on how far rates have moved. The longer the time remaining until maturity, the more sensitive the price is to rate changes.
This interest rate risk is irrelevant if you plan to hold to maturity. It matters most for investors who might need cash back early or who actively manage a bond portfolio. The government does not guarantee the market price if you sell early. Savings bonds don’t have this problem, since they can only be redeemed with the Treasury at a calculated value and don’t trade on the open market. The worst outcome with a savings bond is the three-month interest penalty for cashing out within the first five years.8eCFR. 31 CFR Part 359 – Offering of United States Savings Bonds, Series I