A 13-week T-bill pays 4.19%; the average savings account pays 0.38%
The October 13, 2026 bill auction cleared at 4.185%, exempt from state income tax. The FDIC national savings average for October 2026 is 0.38%.
- What happened
- The 13-week Treasury bill auctioned on October 13, 2026 cleared at a high discount rate of 4.085% and an investment rate of 4.185%, at a price of $98.967403 per $100. The FDIC national average rate on savings accounts for October 2026, published October 19, 2026, is 0.38%; for money market accounts it is 0.63%.
- Why
- Bill interest is subject to federal income tax but exempt from state and local income tax under 31 U.S.C. 3124. Bank interest is taxed by both. So a bill's yield has to be grossed up by the saver's state rate before it is compared with a bank rate.
- The numbers that matter
- 4.185%Investment rate, 13-week bill auctioned October 13, 2026 (Fiscal Service auction data)0.38%FDIC national average savings rate, October 2026 (released October 19, 2026)4.65%Tax-equivalent yield of that bill for a saver in a 10% state bracket (calculation)$951.25Extra interest on $25,000 over a year at 4.185% versus 0.38% (calculation, before tax)
- Why it matters
- On $25,000, the gap between the October 13 bill rate and the FDIC savings average is $951.25 a year before tax, and the state-tax exemption widens it further for anyone outside a no-tax state.
- What happens nextas we saw it on 20 Oct 2026
- 13-week bills are auctioned every Monday (or the next business day after a holiday); the next auctions on the Treasury schedule are October 26, November 2 and November 9, 2026. The FDIC's monthly rate tables appeared on September 21 and October 19, 2026, both Mondays.
The 13-week bill's investment rate is eleven times the national average savings rate before tax, and the gap grows once state tax is counted.
| 26-week bill, investment rate (Oct 13 auction) | 4.351 |
|---|---|
| 13-week bill, investment rate (Oct 13 auction) | 4.185 |
| 4-week bill, investment rate (Oct 15 auction) | 4.068 |
| FDIC national rate, money market | 0.63 |
| FDIC national rate, savings | 0.38 |
A $25,000 balance left in a savings account paying the national average earns $95.00 in a year. The same $25,000 rolled through 13-week Treasury bills at the rate set on October 13, 2026 earns $1,046.25. The difference is $951.25 before tax, and after state income tax the bill pulls further ahead, because the Treasury's interest is not taxed by any state and the bank's is.
The 0.38% is the Federal Deposit Insurance Corporation's national average for savings accounts for October 2026, published October 19, 2026. The 4.185% is the investment rate at which the Treasury sold 13-week bills on October 13, 2026, in the Bureau of the Fiscal Service's auction data. What follows is how a bill is priced, what the state-tax exemption is worth at three state rates, and how a four-rung ladder of 13-week bills pays out every three weeks.
What the October 2026 auctions actually paid
The Fiscal Service's auction dataset records the 13-week bill (CUSIP 912797VT1) auctioned on October 13, 2026, issued October 15, 2026 and maturing January 14, 2027: high discount rate 4.085%, high investment rate 4.185%, price $98.967403 per $100, bid-to-cover 2.68, offering amount $95 billion. The same day's 26-week bill cleared at a 4.351% investment rate and the 4-week bill of October 15 at 4.068%. The 13-week and 26-week bills auctioned on October 19, 2026 showed no results in the dataset as of October 20, 2026.
| Term | Auction date | Issue date | Matures | High discount rate | Investment rate | Price per $100 |
|---|---|---|---|---|---|---|
| 4-week | Oct 15, 2026 | Oct 20, 2026 | Nov 17, 2026 | 4.000% | 4.068% | $99.688889 |
| 8-week | Oct 15, 2026 | Oct 20, 2026 | Dec 15, 2026 | 4.050% | 4.132% | $99.370000 |
| 13-week | Oct 13, 2026 | Oct 15, 2026 | Jan 14, 2027 | 4.085% | 4.185% | $98.967403 |
| 17-week | Oct 14, 2026 | Oct 20, 2026 | Feb 16, 2027 | 4.195% | 4.313% | $98.613319 |
| 26-week | Oct 13, 2026 | Oct 15, 2026 | Apr 15, 2027 | 4.200% | 4.351% | $97.876667 |
The Treasury's Daily Treasury Bill Rates page lists, for October 19, 2026, a 13-week coupon equivalent of 4.20% (4-week 4.01%, 26-week 4.38%). Those are secondary-market quotes, not auction results; on October 1, 2026 the 13-week figure was 4.10%. The shape of the yield curve at the short end is visible in the step from 4.01% to 4.38%.
Discount rate, investment rate, and why they differ
A bill pays no coupon. TreasuryDirect says bills “are typically issued at a discount from the par amount (also called face value)” and “your interest is the face value minus the purchase price”. Two rates are published for every auction; they measure the same interest two ways.
The Treasury's note “Price, Yield and Rate Calculations for a Treasury Bill” gives the price P = 100 × (1 − d × r ÷ 360), where d is the discount rate and r is days to maturity, and for bills of six months or less the investment rate i = ((100 − P) ÷ P) × (y ÷ r), where y is days in the year. The investment rate, also called the coupon-equivalent yield, is the figure to set against a bank's annual percentage yield, because it measures what the money actually paid earns over a calendar year.
Days from issue (October 15, 2026) to maturity (January 14, 2027): 91. Price = 100 × (1 − 0.04085 × 91 ÷ 360) = 100 × (1 − 0.010326) = 98.9674, matching the published $98.967403. Investment rate = ((100 − 98.967403) ÷ 98.967403) × (365 ÷ 91) = 0.010434 × 4.0110 = 4.185%, matching the published figure. For a $25,000 face amount, the purchase price is $25,000 × 0.98967403 = $24,741.85 and the interest at maturity is $258.15.
TreasuryDirect states that bills are sold in $100 increments with a $100 minimum, and that all bills except the 52-week and cash-management bills are auctioned every week. How an auction clears is covered in Inside a Treasury auction.
The state-tax exemption and what it is worth
31 U.S.C. 3124(a) reads: “Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax”, with exceptions only for a nondiscriminatory corporate franchise tax and for estate or inheritance taxes. The Fiscal Service's publication on interest-income reporting (FS Publication 0011, revised March 2019) puts it in plain words: “only Federal tax applies; your Treasury securities are exempt from state and local income taxes.”
Bank deposit interest has no such exemption: it is ordinary income federally and in every state with an income tax. To compare the two on equal terms, the bill's yield is converted into the bank yield that would leave the same money after state tax. That is the tax-equivalent yield.
Formula: tax-equivalent yield = bill investment rate ÷ (1 − state marginal rate). At 0% (a state with no income tax): 4.185% ÷ 1.00 = 4.185%. At 5%: 4.185% ÷ 0.95 = 4.405%. At 10%: 4.185% ÷ 0.90 = 4.650%. A saver in a 10% state bracket needs a bank account paying 4.65% to keep as much after state tax as the bill leaves. The formula ignores federal tax, which both earn at the same rate, and the federal itemised deduction for state taxes, which would shrink the gap slightly for a saver who itemises.
| Bill | Investment rate | 0% state | 5% state | 10% state |
|---|---|---|---|---|
| 4-week (Oct 15 auction) | 4.068% | 4.068% | 4.282% | 4.520% |
| 13-week (Oct 13 auction) | 4.185% | 4.185% | 4.405% | 4.650% |
| 26-week (Oct 13 auction) | 4.351% | 4.351% | 4.580% | 4.834% |
What a savings account pays, on average
The FDIC's National Rates and Rate Caps monthly update, as carried on FRED and last updated October 19, 2026, shows the national rate on savings accounts at 0.38% for October 2026 (0.37% in September, 0.38% from April through August). The national rate on money market accounts under $100,000 is 0.63% for October 2026. FRED's series notes describe the national rate as a weighted average of rates paid by insured depository institutions and credit unions, each weighted by its share of domestic deposits.
The weighting matters. A large bank paying almost nothing on a very large deposit base pulls the average down; a small institution paying a high rate on a small base barely moves it. The 0.38% is the rate the typical dollar of savings earns, not the best rate on offer. The FDIC also publishes a national rate cap, 4.63% for savings in October 2026; it is a supervisory limit on what less-than-well-capitalised banks may pay, not a market rate.
The gap between a deposit-weighted average of 0.38% and the rates banks compete on is wide, and a saver who shops around can close much of the distance before tax. But an advertised rate is a marketing figure on a particular day, can change without notice, and may apply only above a minimum balance or for a promotional period. None appears here because none was read from a primary page. The point that survives any bank's rate is the tax one: a deposit must beat the bill's tax-equivalent yield, not its headline rate, for a saver in a state with an income tax.
A four-rung 13-week ladder, with dates
A single 13-week bill ties money up for 91 days. A ladder splits it into four pieces bought three weeks apart, so one piece matures every three weeks and can be spent or rolled into a new 13-week bill. The dates come from the Treasury's tentative auction schedule and the Fiscal Service auction data.
Rung 1: auction Monday October 19, 2026, issued October 22, matures January 21, 2027 (CUSIP 912797TM9 per the Fiscal Service data). Rung 2: auction November 9, issued November 12, matures 91 days later on February 11, 2027. Rung 3: auction November 30, issued December 3, matures March 4, 2027. Rung 4: auction December 21, issued December 24, matures March 25, 2027. At the October 13 price of $98.967403, a $6,250 rung costs $6,185.46 and returns $6,250, $64.54 of interest; later rungs settle at their own auction prices. When rung 1 matures on January 21, 2027, the schedule shows a 13-week bill auctioned Tuesday January 19 and settling Thursday January 21, so the proceeds roll straight in with no idle day. From then on a rung matures every three weeks, each repriced at that week's auction.
- Each new bill resets to that week's auction rate, so the ladder's income follows short-term rates with a lag of at most 13 weeks.
- The longest wait for cash without selling is 21 days.
- FS Publication 0011 says bill interest is reported in the year the bill matures or is sold, so a rung bought in December 2026 and maturing in March 2027 is 2027 income.
What it means for your money
At 4.185%: $25,000 × 0.04185 = $1,046.25. At 0.38%: $25,000 × 0.0038 = $95.00. At 0.63%: $25,000 × 0.0063 = $157.50. Difference between bill and savings: $951.25. In a 10% state the bill's exemption is worth 10% of its interest, $104.63. The $1,046.25 treats 4.185% as a flat rate for twelve months; a real ladder earns whatever each auction sets, and reinvested interest compounds slightly on top.
Two mechanical differences remain. A savings account can be drawn at any time; a ladder delivers cash on a schedule, every three weeks in the version above, which matters for an emergency fund. And deposit insurance and Treasury backing are different legal arrangements: the FDIC covers deposits per depositor, per bank, per ownership category, as explained in the FDIC coverage piece, while a bill is a direct obligation of the United States with no bank in between.
A government money market fund holds bills and similar paper and passes the yield through after its expense ratio; the state-tax treatment of its dividends depends on the share of its income that came from Treasuries. That structure is in the money market funds piece, and the October 2026 note and bond auctions are in the October auctions piece.
Sources
- Treasury Securities Auctions Data (auctions_query), bill auctions October 5 to October 20, 2026Bureau of the Fiscal Service, Fiscal Data API · Oct 20, 2026 · Primary source
- Daily Treasury Bill Rates, October 2026U.S. Department of the Treasury · Oct 20, 2026 · Primary source
- Tentative Auction Schedule of U.S. Treasury Securities (announcements August 5, 2026 to January 28, 2027)U.S. Department of the Treasury · Oct 20, 2026 · Primary source
- Price, Yield and Rate Calculations for a Treasury BillU.S. Department of the Treasury / TreasuryDirect · Oct 20, 2026 · Primary source
- Treasury Bills In DepthTreasuryDirect (Bureau of the Fiscal Service), via savingsbond.gov · Oct 20, 2026 · Primary source
- FS Publication 0011: Interest Income Reporting for Marketable Treasury Securities (revised March 2019)Bureau of the Fiscal Service, via savingsbond.gov · Oct 20, 2026 · Primary source
- 31 U.S.C. 3124, Exemption from taxation (United States Code, 2023 edition)Office of the Law Revision Counsel, via govinfo.gov · Oct 20, 2026 · Primary source
- National Rate: Savings (SNDR), National Rates and Rate Caps - Monthly Update, updated October 19, 2026Federal Deposit Insurance Corporation, via FRED · Oct 20, 2026 · Primary source
- National Rate: Money Market <100M (MMNDR), National Rates and Rate Caps - Monthly UpdateFederal Deposit Insurance Corporation, via FRED · Oct 20, 2026 · Primary source
- National Rate Cap: Savings (SNRC), National Rates and Rate Caps - Monthly UpdateFederal Deposit Insurance Corporation, via FRED · Oct 20, 2026 · Primary source
Related analysis
$7.89 trillion sits in money market funds, none of it FDIC-insured
Money market funds run on SEC Rule 2a-7, not deposit insurance. What the 2023 reforms changed, how a 7-day yield works and what it pays on $10,000.
The $250,000 FDIC limit applies per category, not per person
Deposit insurance is counted per depositor, per bank, per ownership category. One married couple's accounts at one bank, worked through dollar by dollar.
10-year note sold at 5.300% on October 7; dealers took 2.5% of it
Three Treasury auctions, week of October 6, 2026: 3-year at 4.932%, 10-year at 5.300%, 30-year at 5.618%, all above September. The results, line by line.
$39 billion at 4.538%: how one auction set the 10-year yield
The Treasury sold $39.0 billion of 10-year notes in June 2026 at one yield, 4.538%. The machinery that produced that number, from the primary sources.