By Harry Prabandham · Updated September 28, 2026
Investing & Markets
Treasuries, I Bonds, and TIPS: How U.S. Government Securities Compare
T-bills, notes, and bonds pay fixed rates; I bonds and TIPS adjust for inflation. All are state-tax-exempt, but limits, liquidity, and taxes differ.
Treasuries, I Bonds, and TIPS: How U.S. Government Securities Compare
1 / 6
What are the main types of U.S. Treasury securities?
- Bills mature in 4, 6, 8, 13, 17, 26, or 52 weeks and are sold at a discount; you receive face value at maturity.
- Notes mature in 2, 3, 5, 7, or 10 years and bonds in 20 or 30 years; both pay interest every six months.
- TIPS are marketable securities whose principal adjusts with inflation, issued in 5-, 10-, and 30-year terms.
- Series I savings bonds are non-marketable and sold only through TreasuryDirect.
- Interest on all of them is federally taxable but exempt from state and local income tax.
Try Our Free Tools
Full Guide
What are the main types of U.S. Treasury securities?
- Bills mature in 4, 6, 8, 13, 17, 26, or 52 weeks and are sold at a discount; you receive face value at maturity.
- Notes mature in 2, 3, 5, 7, or 10 years and bonds in 20 or 30 years; both pay interest every six months.
- TIPS are marketable securities whose principal adjusts with inflation, issued in 5-, 10-, and 30-year terms.
- Series I savings bonds are non-marketable and sold only through TreasuryDirect.
- Interest on all of them is federally taxable but exempt from state and local income tax.
How do T-bills work for short-term cash?
- The difference between the discounted purchase price and face value is your interest.
- Bills are backed by the full faith and credit of the U.S. government.
- They can be bought at auction through TreasuryDirect or a brokerage, and sold before maturity through a brokerage at the market price.
- Treasury money market funds hold bills and similar securities but aren't FDIC-insured and can lose value.
How do I bonds work?
- The rate combines a fixed rate set at purchase, which lasts for the bond's life, with an inflation rate reset every six months based on CPI.
- The combined rate can't fall below zero.
- Electronic purchases are capped at $10,000 per person per calendar year; buying paper I bonds with a tax refund ended January 1, 2025.
- Bonds can't be cashed for 12 months, and cashing before five years forfeits the last three months of interest.
- Federal tax can be deferred until redemption, and interest may be excludable for qualified education costs, subject to income limits.
How do TIPS work?
- Principal rises with inflation and falls with deflation, and interest is paid twice a year on the adjusted principal.
- At maturity you receive the greater of the inflation-adjusted principal or the original principal.
- Inflation adjustments are generally taxable in the year they occur, even though the cash isn't received until maturity or sale.
- TIPS prices move with real interest rates, so they can lose value if sold before maturity.
What are the trade-offs among them?
- Bills: short maturities and low price risk, but income changes each time they roll over.
- Longer notes and bonds lock in a rate but can lose value if rates rise before maturity.
- I bonds: no market price swings and tax deferral, but a small annual limit and a one-year lockup.
- TIPS: larger amounts and direct inflation adjustment, but yearly tax on adjustments, which is one reason many hold them in tax-deferred accounts.
Key takeaways
- All Treasuries are federally taxable and state-tax-exempt, which matters in high-tax states like California.
- Bills suit short-term cash; notes and bonds lock in rates with more price risk.
- I bonds are limited to $10,000 a year electronically, and the paper tax-refund option has ended.
- TIPS offer inflation adjustment at scale, with taxable adjustments each year.
Related Topics
Investing & Markets
Bond Basics: How Bonds, Yields and Duration Work
A bond is a loan that pays interest and returns principal at maturity. Bond prices fall when rates rise, and longer bonds move more.
Investing & MarketsInflation and Your Portfolio: How Different Assets Respond
Inflation reduces what each dollar buys. TIPS, I bonds, real assets, and stocks respond differently, and no single asset has kept pace in every period.
Personal FinanceHigh-Yield Savings and Cash Management: Where to Keep Idle Cash
Savings rates vary widely by bank. High-yield savings, money market funds, and T-bills can pay more, with different insurance and tax treatment.