Accrued interest is interest that has been earned but not yet paid. On a bond it is the part of the next coupon that has built up since the last payment date. Issuers pay each coupon in full to whoever owns the bond on the payment date, so when a bond changes hands between coupon dates, the buyer pays the seller for the days the seller held it. The quoted price, called the clean price, leaves that amount out; the total that changes hands, the dirty or full price, puts it back in. The same phrase appears on savings and CD statements, where it means interest earned since the bank last credited it. This page uses US Treasury notes to show the mechanics; the rest of the Treasury family is on the US Treasuries hub.
How is accrued interest calculated on a Treasury note?
Divide the semiannual coupon by the number of days in the current half-year, then multiply by the days elapsed since the last coupon date.
Treasury's own rules for notes and bonds, in Appendix B to 31 CFR Part 356, fix the day count. Each coupon is half a year's interest whatever the calendar says, but the daily rate used for accrued interest divides that coupon by the actual number of days in the half-year: 181, 182, 183 or 184. August 15 to February 15 always has 184 days; February 15 to August 15 has 181, or 182 in a leap year. Counting real days in the real coupon period is called the actual/actual method. Treasury rounds the result to five decimal places per $1,000 of face value and scales up from there.
Because half-years differ in length, a day of interest is not always worth the same. On $10,000 of a 4.625% note, the $231.25 coupon spread over 184 days accrues about $1.2568 a day from August to February, and spread over 181 days about $1.2776 a day from February to August. The count runs from the last coupon date up to, but not including, the settlement date, the day money and securities actually change hands, rather than the trade date.
What is the difference between clean and dirty price?
The clean price leaves accrued interest out; the dirty price, also called the full or invoice price, adds it and is what the buyer actually pays.
Worked example: Buying $10,000 of the 4.625% note due 2036 for settlement on November 3, 2026
The 10-year note first sold in August 2026 (CUSIP 91282CRF0) pays $231.25 per $10,000 every February 15 and August 15. A trade on Monday, November 2 that settles on Tuesday, November 3 lands 80 days into the 184-day half-year that runs from August 15 to February 15. Assume the trade is done at a 4.94% yield, the 10-year par yield on October 30, 2026.
- Daily interest: $23.125 per $1,000 ÷ 184 = $0.125679348 per $1,000
- Accrued interest: $0.125679348 × 80 = $10.05435 per $1,000, or $100.54 on $10,000
- Clean price at a 4.94% yield, using Treasury's pricing formula: 97.565348 per $100, or $9,756.53
- Dirty price: $9,756.53 + $100.54 = $9,857.07 paid on November 3
- Next coupon: $231.25 on Tuesday, February 16, 2027, because the 15th is a federal holiday. Of that, $100.54 returns the accrued interest paid and $130.71 is interest earned over the 104 days owned
Quoting clean prices keeps the calendar out of the quote. The table holds the note's yield at 4.94% and changes only the settlement date, per $10,000 of face value.
| Settlement date | Days accrued | Accrued interest | Clean price | Dirty price |
|---|---|---|---|---|
| August 17, 2026 | 2 of 184 | $2.51 | $9,753.82 | $9,756.33 |
| November 3, 2026 | 80 of 184 | $100.54 | $9,756.53 | $9,857.07 |
| February 12, 2027 | 181 of 184 | $227.48 | $9,763.19 | $9,990.67 |
| February 17, 2027 | 2 of 181 | $2.56 | $9,763.49 | $9,766.05 |
The dirty price climbs every day and then drops by roughly one coupon once the coupon is paid, while the clean price moves only $9.67 in six months as the discount slowly pulls toward face value. So a change in a clean quote reflects a change in yield, not the date. Yield measures that divide by price use the clean figure too: the current yield here is 4.625 ÷ 97.565 = 4.74%, and the 4.94% input is the same par yield tracked on the Treasury yield curve page.
Do all bonds count days the same way?
No: Treasury notes and bonds use actual days, while corporate and municipal bonds use a 30-day month and 360-day year, and some floating-rate securities use actual/360.
| Convention | Used for | Days counted, August 15 to November 3, 2026 | Accrued on $10,000 at 4.625% |
|---|---|---|---|
| Actual/actual | Treasury notes and bonds | 80 of a 184-day half-year | $100.54 |
| 30/360 | Corporate bonds (FINRA Rule 11620) and municipal bonds (MSRB Rule G-33) | 78 of a 180-day half-year | $100.21 |
| Actual/360 | Treasury floating rate notes | 80 days of a 360-day year | $102.78 |
| None | Treasury bills and zero-coupon STRIPS | No coupon to accrue | $0 |
The last column applies each convention to the same 4.625% rate, so only the day count differs. Under 30/360 every month counts as 30 days. MSRB Rule G-33 prints the formula, (Y2 − Y1) × 360 + (M2 − M1) × 30 + (D2 − D1), so August 15 to November 3 is 3 × 30 + (3 − 15) = 78 days. FINRA's Rule 11620 applies the same basis to trades between its member firms; its uniform practice code leaves out government and municipal securities, which is why munis have their own rule and Treasuries follow Treasury's. Treasury floating rate notes accrue each day at their index plus spread divided by 360, and TIPS multiply accrued interest by an inflation index ratio, so the amount grows with prices as well as with time. Bills and STRIPS have none at all: their return is built into a price that rises toward par value, as what is a Treasury bill explains.
Where do you see accrued interest?
Most often on Treasury auction results and broker trade confirmations, which list it beside the price, and at tax time on Schedule B.
Treasury's auction results list it whenever a note or bond is issued after its interest start date, as happens at every reopening. The 4.625% note above shows how it builds through a coupon period:
| Auction | Issue date | Days since August 15 | Price per $100 | Accrued interest per $1,000 |
|---|---|---|---|---|
| August 12, 2026, new note | August 17 | 2 | 99.540696 | $0.25136 |
| September 9, 2026, reopening | September 15 | 31 | 98.361116 | $3.89606 |
| October 7, 2026, reopening | October 15 | 61 | 94.864261 | $7.66644 |
Each figure is the daily rate of $0.125679348 per $1,000 times the days elapsed, rounded to five places. The price column fell as auction yields rose from 4.683% to 5.300%, while the accrued column simply counted days. Even the new note carried a sliver, because August 15 fell on a Saturday and issuance waited until Monday. How reopenings are scheduled and priced is covered in how Treasury auctions work, and the October purchase is worked through in Treasury notes explained.
On a broker's confirmation, accrued interest typically sits on its own line beside the principal amount. For municipal bonds, MSRB Rule G-33 even sets how it is rounded for the confirmation: truncated to three decimal places, then rounded to two.
How is accrued interest taxed?
The seller reports accrued interest received as interest income, and the buyer treats the matching part of the next coupon as a return of capital, not income.
Both rules come from IRS Publication 550, under bonds sold between interest dates: the buyer reduces the bond's cost basis when that interest comes back. If the payer's Form 1099-INT reports the whole coupon, the Schedule B instructions say to list the full amount, then subtract the accrued interest paid to the seller below the subtotal, labeled "Accrued Interest". In the example, $100.54 of the February coupon would be subtracted and $130.71 kept as interest. On the other side of the trade, the accrued interest a buyer pays you when you sell is interest income, as selling Treasuries before maturity shows. Treasury interest is free of state and local income tax, and the rest of the reporting is in are T-bills taxable? Tax rules change, so a tax professional can confirm how they apply to a particular return.
What mistakes do people make with accrued interest?
The common ones are mistaking the dirty price for an overpayment, paying tax on the whole first coupon and counting to the trade date instead of settlement.
- Reading the debit as an overpayment. A cash debit above the quoted price is not a markup when the gap equals accrued interest, which comes back in full on the next coupon date. Check how the confirmation splits principal and interest before comparing prices.
- Reporting the whole first coupon as income. The accrued part is your own money returning. Without the Schedule B subtraction, the $100.54 in the example would be taxed twice, once to the seller and once to you.
- Budgeting for the clean price only. Late in a period the accrued amount approaches a full coupon: three days before the February payment it was $227.48 on $10,000 in the table above.
- Using the wrong day count. A 365-day year or 30/360 gives a Treasury figure that is off by cents to dollars, and the daily amount differs between the 181- and 184-day half-years.
- Counting to the trade date. Interest accrues up to, but not including, settlement, so a Friday trade that settles on Monday carries three more days of interest than one settling that Friday.
- Expecting extra interest for a late coupon. Under 31 CFR 356.30, a payment due on a weekend or holiday is made the next business day without additional interest, so the February 2027 coupon is still $231.25 when it arrives a day late.