How to Build a T-Bill Ladder: TreasuryDirect vs Brokerage, Auctions, Auto-Roll and Taxes
A ladder of Treasury bills turns a pile of cash into a schedule: part of it matures every week or month, and the rest keeps earning. Here's how to build one, where to buy, how rollovers work and how the interest is taxed.
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📐 Figures verified Sep 27, 2026 against TreasuryDirect's Treasury bill, buying and auction-timing pages and its user guide, and the Federal Reserve. Yields in the example are illustrative; check recent auction results before you buy. How we check numbers →
A T-bill ladder splits cash across bills that mature on a schedule, so part of it comes due every few weeks. Buy at auction through TreasuryDirect ($100 minimum) or a brokerage, set maturing bills to reinvest, and pay federal tax but no state tax on the interest. Brokerages make selling early easier; TreasuryDirect charges no fees.
Numbers That Matter
| Figure | Amount | Source | Verified |
|---|---|---|---|
| Bill terms | 4, 6, 8, 13, 17, 26 and 52 weeks | TreasuryDirect | Sep 27, 2026 |
| Minimum and increments | $100, in $100 steps; up to $10 million per noncompetitive bid | TreasuryDirect | Sep 27, 2026 |
| Auction frequency | Weekly for 4- to 26-week bills; every four weeks for 52-week bills | TreasuryDirect | Sep 27, 2026 |
| 13- and 26-week bill schedule | Announced Thursday, auctioned Monday, issued Thursday | TreasuryDirect | Sep 27, 2026 |
| Reinvestment in TreasuryDirect | Bills can be set to reinvest for up to two years | TreasuryDirect user guide | Sep 27, 2026 |
| Taxes | Federal tax on the interest; no state or local income tax | TreasuryDirect | Sep 27, 2026 |
| Federal funds target range | 3.75%–4.00% | FOMC statement | Sep 27, 2026 |
How a Bill Works
A Treasury bill pays no interest along the way. You buy it at a discount, and at maturity you get the full face value; the difference is your interest. The rate is set at auction, and a noncompetitive bid, the kind individuals place, gets the full amount at whatever rate the auction produces. Bills come in seven terms from 4 to 52 weeks, and most are auctioned every week.
Building the Ladder
A ladder staggers maturities so cash comes due on a schedule you choose, instead of all at once. The simplest version for a steady cash stream:
- Pick the rung length from when you might need the money. 13-week bills balance yield and access for most savers.
- Split the cash into equal rungs, say four.
- Buy one rung a week in four straight 13-week auctions. From week 14, one bill matures every week.
- Reinvest each maturing rung into a new 13-week bill, or spend it if you need it. Your whole ladder reprices gradually as rates move.
Want monthly instead of weekly access? Buy 26-week bills once a month for six months; after that, one matures every month.
TreasuryDirect or a Brokerage?
| TreasuryDirect | Brokerage | |
|---|---|---|
| Minimum | $100, in $100 steps | Often $1,000 of face value |
| How you buy | Noncompetitive bids at auction | At auction or in the secondary market |
| Rolling over | Schedule reinvestment for up to two years | Auto-roll where offered |
| Selling before maturity | Transfer the bill to a broker first | Sell any trading day at the market price |
| Where maturing cash lands | Your linked bank account | Your brokerage cash, which may sit in a low-rate sweep |
| Fees | None | Check your broker's schedule |
Selling before maturity means taking the market price, which can be above or below what you paid. If you might need the money early, a brokerage makes that easier; if you'll hold to maturity, TreasuryDirect is simple and free.
Taxes on Bill Interest
The discount you earn is interest, reported on Form 1099-INT and taxed federally in the year the bill matures. It is exempt from state and local income tax, which is worth more the higher your state rate. The after-tax comparison shows the savings yield it takes to match a bill in your state. Watch your state return: the interest appears on the same 1099-INT as taxable interest, so you subtract it where the form asks.
Worked Example: A $40,000 Weekly Ladder
- The plan: $40,000 split into four $10,000 rungs, each a 13-week bill bought in four consecutive weekly auctions.
- Each rung at an illustrative 3.85% earns about $96.25 per 13 weeks.
- Over a year, with every rung reinvested, the ladder earns about $1,540, or $1,201.20 after 22% federal tax.
- The state tax they skip at a 5% rate: $77 a year, compared with a fully taxable account paying the same yield.
- Access: $10,000 comes due every week once the ladder is built, so an emergency never forces a sale.
The yield is illustrative and held constant; real auction rates change weekly. Simple interest, before compounding. The Lius are an illustration.
Decision Rules
If this, then that
- If you want a steady cash stream → ladder 13-week or 26-week bills on a schedule and reinvest each rung.
- If you might need to sell early → buy through a brokerage.
- If you'll hold to maturity and want no fees → use TreasuryDirect and schedule reinvestments.
- If maturing cash lands in a brokerage sweep → auto-roll it or move it so it doesn't sit at a low rate.
- If you pay state income tax → count the exemption when you compare bills with savings and CDs.
Mistakes to avoid
- Letting maturing bills sit in a low-rate sweep.
- Buying a bill that matures after you need the money.
- Missing the cutoff to schedule or change a reinvestment.
- Paying state tax on bill interest by not subtracting it on your state return.
- Reaching for longer bills with money you'll need soon.
Related: T-bills vs savings vs CDs runs the after-tax comparison; brokerage cash sweeps explains where maturing cash can get stuck; rate benchmarks explained shows what drives bill yields; and where to keep an emergency fund covers the cash you need on day one. More guides are in the Banking & Savings hub.