Ultimate Guide to High-Yield Treasury Bills: Key Strategies for 2026

Investors seeking risk-free returns in 2026 should prioritize the investment rate over the discount rate, as the latter is based on a 360-day accounting convention and doesn't reflect true annualized returns. Shorter-duration Treasury bills, particularly 4-week and 8-week maturities, may offer higher yields than 52-week bills due to anticipated Federal Reserve easing, creating opportunities in the front-end yield curve.

The state tax exemption on Treasury interest provides a significant advantage for investors in high-tax jurisdictions like New York and California, boosting after-tax returns. Automated reinvestment through brokerage auto-roll programs, such as those offered by Fidelity, can eliminate cash drag and maintain portfolio efficiency.

Liquidity considerations favor recently issued "on-the-run" bills, which typically trade with the narrowest bid-ask spreads. A disciplined approach to maturity laddering—staggering investments across 4, 13, and 26-week bills—can optimize both yield and liquidity while mitigating reinvestment risk.