A 6-Month Treasury is a U.S. government debt security with a maturity of 182 days, offering fixed interest and considered virtually risk-free.
A 6-Month Treasury, also referred to as a 182-day T-bill, is a short-term debt obligation issued by the U.S. Department of the Treasury. It is sold at a discount to face value and matures in approximately six months. The investor receives the face value at maturity, and the difference between the purchase price and the face value represents the interest income earned. 6-Month Treasuries are auctioned regularly, with competitive and non-competitive bidding options. Because they are backed by the U.S. government, they are considered among the safest investments, making them highly attractive for capital preservation and liquidity management. These instruments are part of the broader Treasury bill (T-bill) market, which includes shorter and slightly longer maturities such as the 1-Month, 3-Month, and 52-Week bills. T-bills do not pay periodic interest; instead, they offer yields through price appreciation at maturity. In portfolio construction, 6-Month Treasuries are often used as a defensive allocation during periods of market uncertainty, rising interest rates, or for short-term cash deployment scenarios.
In the context of wealth management, especially for family offices, 6-Month Treasuries provide a low-risk, highly liquid instrument to manage short-term capital while safeguarding against market volatility. Their predictable returns and U.S. government backing make them ideal for meeting treasury management needs, rebalancing portfolios, or parking funds temporarily. They also serve as a component of broader asset allocation and cash flow strategies, particularly when implementing laddered treasury portfolios or optimizing after-tax yield in taxable accounts. Additionally, their role as a benchmark for short-term interest rates affects strategic and tactical decisions across fixed-income and alternative asset classes.
Suppose a family office purchases $1,000,000 worth of 6-Month Treasuries at a discount price of $985,000. Upon maturity, it receives the full face value of $1,000,000. The implied interest income is $15,000 over 182 days, which translates to an annualized yield of approximately 3.04%. This strategy aligns well in a rising interest rate environment where reinvestment at higher rates every six months is attractive.
6-Month Treasury vs. 1-Year Treasury
While both are U.S. government-issued and considered risk-free, the 6-Month Treasury offers a shorter maturity and typically a lower yield compared to the 1-Year Treasury. Investors may use 6-Month Treasuries for greater flexibility, while 1-Year Treasuries provide slightly higher income in exchange for longer commitment.
Are 6-Month Treasuries subject to federal or state taxes?
Interest from 6-Month Treasuries is subject to federal income tax but exempt from state and local taxes, making them especially tax-efficient for residents in high-tax states.
How are 6-Month Treasuries purchased?
They can be purchased directly from TreasuryDirect.gov during scheduled auctions or through brokers and custodians, often using competitive or non-competitive bid options.
Do 6-Month Treasuries pay interest like bonds?
No. Instead of paying periodic interest, they are sold at a discount and redeemed at face value upon maturity. The gain represents the earned interest.
