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Tax Mama
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BonPaulProductions (all rights reserved)
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T-Bills
Treasury bills are short-term government securities with maturities ranging from a few days to 26 weeks. Bills are sold at a discount from their face value, which basically means this: When you purchase a Treasury Bill, you pay less that the face value. When the Bill reaches maturity, the full face value is redeemed.
Keep this in mind: Unlike Notes, bonds or TIPS, Treasury Bills pay the interest due on maturity (because of the short term).
There are some tax advantages. The interest received is exempt for state and local taxes but the holder of the bill is taxed on a federal level.
The Original Issue Rate of a Treasury Bill is determined at auction. At a recent auction, a perspective buyer would have been offered a Treasury Bill with the following:
A 28-DAY Bill sold on 01-05-2006 would mature on 02-02-2006 that had a discount rate of 3.965% and a rate at maturity of 4.033% and cost the buyer $99.691611 per hundred dollar face value.
Minimum Purchase:
$1,000
Investment Increment:
Multiples of $1,000
Issue Method:
Electronic
The Rates and Terms
- Treasury bills are issued for terms of 4, 13, and 26 weeks. Another type of Treasury bill, the cash management bill, is issued in variable terms, usually of only a matter of days.
- 4-week, 13-week, and 26-week bills are auctioned on a regular schedule, usually weekly..
- Cash management bills aren't auctioned on a regular schedule
- Bills are sold at a discount.
You can buy Treasury Bills here. If you have additional questions about these investments, you can find the answers here
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All content is © copyright (1998-2006)
BonPaulProductions (all rights reserved)
The BlueCollarDollar (SM) © copyright 1998-2006
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