High-yield savings accounts are the easiest place to earn roughly 3-4% on cash as of September 2026. Treasury bills can earn a comparable or slightly higher nominal rate, and more after state taxes in high-tax states. The right choice depends on where you live, how much you have, and how much effort you’re willing to invest.
HYSA vs Treasury Bills: Quick Comparison
| Feature | High-Yield Savings (HYSA) | Treasury Bills (T-Bills) |
|---|---|---|
| Typical rates (Sept 2026) | ~3.0-4.0% APY | ~3.85-4.36% (4-week to 52-week, coupon equivalent) |
| State/local tax | Taxable | Exempt |
| Federal tax | Taxable | Taxable |
| Safety | FDIC insured ($250,000) | Full faith & credit of US govt (no limit) |
| Liquidity | Withdraw anytime | Sell early on secondary market (price may vary) |
| Minimum | $0-$1 | $100 |
| Terms | None (open-ended) | 4, 8, 13, 17, 26, 52 weeks |
| How to buy | Open account at bank | TreasuryDirect.gov or brokerage |
| Compounding | Daily, paid monthly | None (sold at discount to face value) |
| Automatic deposits | ✅ | ❌ (must buy new bills each time) |
| FDIC insured | Yes | No (backed directly by US govt) |
| Complexity | Very simple | Moderate |
Rate Comparison (September 2026)
HYSA vs T-Bill Nominal Rates
| Term/Product | HYSA (Representative) | T-Bill Rate (Coupon Equivalent) | Difference |
|---|---|---|---|
| On-demand / 4-week | ~3.0-4.0% | 3.85% | Comparable |
| — / 8-week | ~3.0-4.0% | 3.96% | Comparable to slightly higher |
| — / 13-week (3-month) | ~3.0-4.0% | 4.07% | T-bill modestly higher |
| — / 26-week (6-month) | ~3.0-4.0% | 4.21% | T-bill modestly higher |
| — / 52-week (1-year) | ~3.0-4.0% | 4.36% | T-bill modestly higher |
T-bill rates confirmed via treasury.gov daily Treasury bill rates, September 15, 2026 (coupon-equivalent basis). HYSA rates confirmed from leading bank sites, September 2026. Both fluctuate — confirm current figures before comparing.
T-bills currently pay a comparable or somewhat higher nominal rate than leading HYSAs — but the real advantage is the state tax exemption.
The State Tax Advantage
T-bill interest is exempt from state and local income taxes. HYSA interest is fully taxable. This makes T-bills worth significantly more in high-tax states.
Tax-Equivalent Yield: What a 4.07% (13-Week) T-Bill Is Really Worth
| State | Top State Tax Rate | T-Bill Tax-Equivalent HYSA Rate |
|---|---|---|
| Texas, Florida, Nevada, Wyoming, etc. | 0% | 4.07% (no advantage) |
| Arizona | 2.50% | 4.17% |
| Michigan | 4.25% | 4.25% |
| Colorado | 4.40% | 4.26% |
| Massachusetts | 5.00% | 4.28% |
| Illinois | 4.95% | 4.28% |
| Virginia | 5.75% | 4.32% |
| Minnesota | up to 9.85% | up to 4.51% |
| Oregon | up to 9.90% | up to 4.52% |
| New Jersey | up to 10.75% | up to 4.56% |
| New York | up to 10.90% | up to 4.57% |
| California | up to 13.30% | up to 4.69% |
Tax-equivalent yield = T-bill yield ÷ (1 − state tax rate). Based on the 13-week T-bill coupon-equivalent rate of 4.07% confirmed via treasury.gov on September 15, 2026 — this rate changes at every weekly auction. State tax rates are top marginal brackets and may not apply to all income levels; confirm your own bracket.
A 4.07% T-bill in California (top bracket) is equivalent to about a 4.69% HYSA. That’s a meaningful advantage in high-tax states, though smaller in absolute terms than when rates were higher in 2023-2024.
After-Tax Earnings on $50,000 (One Year)
| Location | HYSA (3.75% − state tax) | T-Bill (4.07% 13-week − no state tax) | T-Bill Advantage |
|---|---|---|---|
| Texas (0% state) | $1,875 | $2,035 | $160 |
| Colorado (4.40%) | $1,792 | $2,035 | $242 |
| Illinois (4.95%) | $1,782 | $2,035 | $253 |
| New York (6.85%) | $1,747 | $2,035 | $288 |
| New Jersey (8.97%) | $1,707 | $2,035 | $328 |
| California (9.30%) | $1,701 | $2,035 | $334 |
| California (13.30%) | $1,626 | $2,035 | $409 |
Federal tax applies equally to both and is excluded from this comparison. Uses a representative 3.75% HYSA rate and the 4.07% 13-week T-bill coupon-equivalent rate confirmed September 2026 — both change over time.
How Treasury Bills Work
T-bills are short-term government debt sold at a discount to face value:
| Step | What Happens |
|---|---|
| 1. Purchase | Buy a $10,000 T-bill for ~$9,750 (example) |
| 2. Wait | Hold for 4-52 weeks depending on the term |
| 3. Maturity | Receive full $10,000 face value |
| 4. Your profit | $250 (the discount is your interest) |
Where to Buy T-Bills
| Platform | Fees | Auto-Reinvest | Ease of Use | Minimum |
|---|---|---|---|---|
| TreasuryDirect.gov | $0 | ✅ (up to 2 years) | Basic | $100 |
| Fidelity | $0 | ✅ | Excellent | $1,000 |
| Schwab | $0 | ✅ | Excellent | $1,000 |
| Vanguard | $0 | ✅ | Good | $1,000 |
| E*Trade | $0 | ✅ | Good | $1,000 |
Buying at Auction vs Secondary Market
| Method | How It Works | Best For |
|---|---|---|
| Auction (non-competitive bid) | Accept whatever rate the auction sets | Most individual investors |
| Auction (competitive bid) | Specify the rate you want (may not fill) | Experienced investors |
| Secondary market | Buy from other investors at current price | Immediate purchase (no waiting for auction) |
For most people: Use non-competitive bids at auction. You’ll get the market rate with guaranteed fill.
T-Bill Ladder Strategy
Since T-bills mature on a set schedule, you can build a “ladder” for regular access:
Sample $50,000 T-Bill Ladder
| Purchase | Amount | Term | Matures |
|---|---|---|---|
| T-Bill 1 | $10,000 | 4-week | Every 4 weeks |
| T-Bill 2 | $10,000 | 8-week | Every 8 weeks |
| T-Bill 3 | $10,000 | 13-week | Every 13 weeks |
| T-Bill 4 | $10,000 | 26-week | Every 26 weeks |
| T-Bill 5 | $10,000 | 52-week | Every 52 weeks |
Set each to auto-reinvest. At any point, you can stop reinvesting and receive cash at maturity.
T-Bill Ladder vs HYSA
| Factor | T-Bill Ladder | HYSA |
|---|---|---|
| Yield (nominal) | Higher | Lower |
| After-tax yield (high-tax state) | Significantly higher | Lower |
| Access to cash | Every 4 weeks (if rolling) | Instantly |
| Effort to maintain | Moderate (set auto-reinvest) | None |
| Additional deposits | Must buy new bills | Deposit anytime |
| Partial withdrawals | Must wait for maturity | Withdraw any amount |
Liquidity Comparison
| Factor | HYSA | T-Bills |
|---|---|---|
| Access time | Same day or next business day | At maturity (4-52 weeks) |
| Sell early | N/A (withdraw freely) | Sell on secondary market (price varies slightly) |
| Early access cost | $0 | Small bid-ask spread (typically <0.1%) |
| Partial withdrawal | Any amount | Must sell full bill (at maturity) or on market |
| Weekend/holiday access | Yes (app transfers) | No (market must be open to sell) |
| Emergency access | Immediate | 1-3 days via secondary market |
Winner: HYSA — instant access with no price risk. T-bills are liquid through the secondary market, but not as convenient.
Safety Comparison
| Factor | HYSA | T-Bills |
|---|---|---|
| Backing | FDIC (US govt guarantee) | Direct US govt obligation |
| Coverage limit | $250,000 per depositor/bank | None (full amount backed) |
| Government backing | Treasury-backed insurance fund | Backed directly by taxing power |
| Credit risk | None (below $250K) | None |
| Interest rate risk | None (variable rate adjusts) | Minimal (short terms) |
| Inflation risk | Rate may lag inflation | Rate may lag inflation |
For amounts under $250,000: effectively identical safety.
For amounts over $250,000: T-bills are safer (no insurance cap). You can also spread HYSA deposits across multiple banks for additional FDIC coverage.
Winner: T-bills for large amounts. Tie for under $250,000.
Complexity Comparison
| Task | HYSA | T-Bills |
|---|---|---|
| Opening account | 5-10 minutes | 15-30 minutes (TreasuryDirect) |
| Making a deposit | Instant transfer | Buy at auction (weekly schedule) or secondary |
| Tracking earnings | Login to bank | Track discount, maturity dates |
| Tax filing | 1099-INT (simple) | 1099-INT (simple) |
| Reinvesting | Automatic | Auto-reinvest or manually rebuy |
| Adjusting strategy | Change nothing | Modify ladder, change terms |
| Time investment | ~0 minutes/month | 5-15 minutes/month |
Winner: HYSA — significantly simpler to open, use, and maintain.
Best Uses for Each
Use a HYSA For:
| Purpose | Why |
|---|---|
| Emergency fund | Instant access, no price risk |
| Sinking funds | Save for irregular expenses monthly |
| Short-term goals | Variable deposits, flexible withdrawals |
| Small balances | Under $5,000 — T-bill hassle not worth it |
| Frequent deposits | Adding money regularly from paychecks |
| Zero-tax states | No tax advantage from T-bills |
Use T-Bills For:
| Purpose | Why |
|---|---|
| Large cash reserves | Over $10,000+ makes the effort worthwhile |
| High-tax state residents | State tax exemption adds 0.25-0.75%+ |
| Over $250,000 | No FDIC cap — unlimited government backing |
| Known time horizon | Match T-bill term to when you need the money |
| Preservation of capital | Zero credit risk, US government backing |
| Part of bond allocation | Short-term fixed income in a portfolio |
Who Should Choose a HYSA?
✅ You live in a no-income-tax state (Texas, Florida, Nevada, etc.)
✅ Your cash savings are under $10,000 — simplicity beats the small rate difference
✅ You need instant access to your money
✅ You make regular deposits from each paycheck
✅ You want zero effort — set it and forget it
✅ You’re saving for an emergency fund
Who Should Choose T-Bills?
✅ You live in a high-tax state (California, New York, New Jersey, Oregon)
✅ You have $10,000+ in cash reserves — worth the extra effort
✅ You have more than $250,000 — T-bills have no cap on government backing
✅ You’re comfortable with TreasuryDirect or a brokerage account
✅ You don’t need instant daily access to this money
✅ You want the highest possible after-tax yield on cash
Best Strategy: Use Both
| Money | Where | Why |
|---|---|---|
| Emergency fund (3-6 months) | HYSA | Instant access, no complications |
| Short-term irregular savings | HYSA | Flexible deposits and withdrawals |
| Large cash reserves ($10K+) | T-Bill ladder | Higher after-tax yield |
| Over $250,000 | T-Bills | No coverage limit |
| Down payment fund (known date) | T-Bill matching maturity | Highest after-tax guaranteed return |
Sample Split: $75,000 Cash
| Account | Amount | Product | After-Tax Yield (CA 9.3%) |
|---|---|---|---|
| Emergency fund | $25,000 | HYSA (~3.75%) | ~3.40% after state tax (CA 9.3%) |
| Working cash buffer | $5,000 | HYSA | ~3.40% after state tax |
| Short-term reserve | $20,000 | 13-week T-bills (auto-rolling) | 4.07% (no state tax) |
| Medium-term reserve | $25,000 | 26-week T-bills (auto-rolling) | 4.21% (no state tax) |
Bottom Line
| Category | Winner |
|---|---|
| Nominal rate | T-bills (slightly higher) |
| After-tax yield (high-tax states) | T-bills (significantly higher) |
| After-tax yield (no-tax states) | Depends on current rates |
| Liquidity | HYSA (instant access) |
| Safety (under $250K) | Tie |
| Safety (over $250K) | T-bills (no cap) |
| Simplicity | HYSA (much simpler) |
| Automatic savings | HYSA (auto-transfers, deposits) |
| Tax efficiency | T-bills (state tax exempt) |
| Best for most people | Depends on your state |
If you live in a high-tax state (California, New York, New Jersey, Oregon, Minnesota), Treasury bills can earn you meaningfully more after taxes — a roughly 4.07% (13-week) T-bill is worth up to about 4.5-4.7% on a tax-equivalent basis in the highest-tax states. If you live in a no-income-tax state (Texas, Florida, Nevada, etc.), the decision comes down to rate and convenience — HYSAs are simpler and nearly as rewarding. Most people benefit from keeping their emergency fund in a HYSA for instant access and moving larger reserves into a T-bill ladder for higher after-tax income. Confirm current rates for both before deciding, since T-bill yields reset at every auction and HYSA rates change with Fed policy.
Related: Best Savings Accounts | CDs vs Treasury Bills | High-Yield Savings vs CD | I Bonds | HYSA vs CD vs Money Market
Holding older paper or electronic bonds? See how to cash a savings bond.
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