Building a Rolling Treasury Ladder for Your Business

Your business account is sitting on cash it does not need this month, and the bank is paying it almost nothing. A Treasury ladder is the simplest way to put that idle cash to work without locking it up. This article shows how the 4/8/13/26-week structure works, when it beats a high-yield savings account, why the state-tax break matters, and the exact steps to set one up.

How a rolling T-bill ladder works

A rolling T-bill ladder splits your idle cash across four short Treasury bills, the 4, 8, 13, and 26-week, so one rung matures roughly every month. As each bill comes due you reinvest the cash into a fresh 26-week bill, the new top rung. The structure keeps part of the money always near at hand while the rest keeps earning.

A Treasury bill (T-bill) is a short-term loan to the federal government. You buy it below face value and collect the full face value at maturity, and the difference is your interest. A ladder simply holds several of them with staggered end dates.

Split $100,000 evenly and the first month looks like this:

• $25,000 in a 4-week bill, your fastest cash, due in about a month.
• $25,000 in an 8-week bill, due in two months.
• $25,000 in a 13-week bill, due in roughly three months.
• $25,000 in a 26-week bill, the longest and usually highest-yielding rung.

When the 4-week bill matures, you reinvest that $25,000 into a new 26-week bill. Do the same each time a rung comes due, and after the first six months every rung is a rolling 26-week bill maturing about a month apart. That is the engine: steady access, steady yield.

Current 2026 rates and the timeline

Current 2026 rates on the four rungs sit close together, near 3.6 to 3.8 percent. As of late May 2026 the 4-week bill yields about 3.62 percent, the 8-week about 3.70 percent, the 13-week about 3.60 percent, and the 26-week about 3.75 percent. These move daily, so always check live rates before you buy.

Short Treasury yields shift with Federal Reserve policy and can change week to week. The figures below were current in late May 2026. Treat them as a snapshot, not a promise, and confirm live numbers on TreasuryDirect or your broker before placing an order.

The chart shows where each rung sits on the calendar and the yield it locks in. The space along the bar is time to maturity; the label is the current yield.

The blended yield of about 3.67 percent on $100,000 produces roughly $3,670 a year if rates hold. Interest at maturity above reflects a single term per rung, so the 4-week figure covers one month and the 26-week figure covers six.

When a ladder beats a savings account

A ladder beats a savings account when your state tax rate is high enough that the Treasury exemption closes the headline gap. In May 2026 the best high-yield business savings rates sit near 4.10 percent, above the 3.67 percent ladder. But savings interest is fully state-taxed, while T-bill interest is not, so the after-tax math can flip in the ladder's favor.

On the surface a 4.10 percent savings account looks better than a 3.67 percent ladder. The difference is tax. Bank interest is taxed by both the federal government and your state; Treasury interest is taxed only federally. Compare the two on what you keep, not the sticker rate.

Take a business owner in a state with a 9 percent income tax. A 4.10 percent savings rate becomes about 3.73 percent after that state tax. The 3.67 percent ladder keeps its full 3.67 percent at the state level because no state tax applies. The gap nearly closes, and in higher-tax states the ladder pulls ahead. In a no-tax state such as Texas or Florida, the savings account keeps its edge and may be the simpler choice.

The state-tax exemption

The state-tax exemption on Treasury interest is the ladder's quiet advantage. Interest on U.S. Treasury bills, notes, and bonds is subject to federal income tax but exempt from all state and local income taxes. Bank savings interest gets no such break, so in a high-tax state the same headline yield is worth more inside Treasuries.

This exemption is federal law, not a loophole, and it applies to bills you hold directly. When you own T-bills in a brokerage or through TreasuryDirect, the interest lands in Box 3 of your Form 1099-INT, which states treat as exempt.

The practical takeaway: the higher your state income tax, the more the ladder is worth relative to a bank account paying the same or slightly more.

How to set one up

To set one up, open a business brokerage or TreasuryDirect account, split your idle cash into four equal slices, and buy a 4, 8, 13, and 26-week bill. Turn on auto-roll so each maturing rung reinvests automatically. Keep a separate operating buffer in checking, and size the ladder to cash you will not touch this quarter.

1. Decide the amount. Use only cash beyond your operating buffer and known bills. Money you need this month does not belong in the longer rungs.
2. Open an account. A business brokerage account makes buying and auto-rolling T-bills simple. TreasuryDirect works too and buys straight from the source.
3. Split into four equal slices and buy one 4-week, one 8-week, one 13-week, and one 26-week bill at the next auction or on the secondary market.
4. Enable auto-roll so each maturing bill reinvests into a new 26-week rung without you lifting a finger.
5. Review quarterly. If you need the cash, let a rung mature and skip the reinvestment instead of selling early.

Want your own numbers, including the after-tax comparison for your state? Run the Treasury ladder calculator.

Frequently asked questions