Treasuries trade in one of the deepest markets in the world, yet selling one early is not always as simple as clicking a button. How you sell, and what you receive, depends on where the security is held and on what interest rates have done since you bought it. This guide covers the TreasuryDirect transfer rules, what a broker's bid really costs, and worked examples of selling a 26-week bill and a 2-year note after rates rise and after they fall, with the tax treatment of each. To value a bill at any discount rate, use the Treasury bill calculator; the rest of the series is on the US Treasuries hub.
Can you sell a Treasury before it matures?
Yes, but only through a bank, broker or dealer, at the price a buyer bids that day, which can be above or below what you paid. Treasury will not redeem a bill or note for you before it matures, and TreasuryDirect has no sell function. Your first step depends on where the security is held.
| Where the security is held | How to sell it before maturity |
|---|---|
| Brokerage or bank account | Place a sell order with that firm |
| TreasuryDirect | Transfer it to a bank, broker or dealer first, then sell there |
| Legacy Treasury Direct | Transfer it out with FS Form 5179, then sell |
The full faith and credit of the US government stands behind every interest payment and the face value at maturity. It does not stand behind the market price. As an SEC investor bulletin puts it, the government does not guarantee a bond's market price or value if you sell before it matures; that price depends on interest rates on the day you sell.
How do you sell a Treasury held in TreasuryDirect?
You transfer it out to a brokerage account with FS Form 5511, then sell it there, and three timing rules decide whether you can start.
- The 45-day hold. A security bought in TreasuryDirect must stay there for 45 calendar days before it can be transferred or sold. A reinvestment paid for entirely by a maturing security is exempt; one topped up with new money is not.
- No 4-week bills. A 4-week bill matures in 28 days, before the hold ends, so it can never be transferred out.
- The closed book period. For four business days before a scheduled interest or maturity payment, TreasuryDirect locks the security and blocks transfers. Forms that arrive during the hold or this window wait until it ends, and the form warns that a request sent just before the window may be rejected or delayed.
A transfer also affects scheduled reinvestments. Moving part of a security cancels all of its reinvestments, and a full transfer keeps them only when the security goes to another TreasuryDirect account with the same taxpayer identification number, so a move to a broker ends them.
Get the receiving firm's details
Ask your broker or bank for its wire name, its ABA routing number, the agent's name and phone number, and the name and number of the account that will receive the security.
Start the transfer in TreasuryDirect
Sign in, open ManageDirect, select the security and choose External Transfer, which links to FS Form 5511, the TreasuryDirect Transfer Request.
Have the form certified
Sign the form in ink in front of a certifying officer at a bank, trust company or credit union, who adds a signature guarantee or Medallion stamp. A notary's certification is not accepted.
Mail it to Treasury
Send it to Treasury Retail Securities Services at the Minneapolis address printed on the form. Staff complete the transfer once the form is received and approved, and TreasuryDirect emails you when it happens.
Sell at the broker
When the security appears in your brokerage account, check the bid and place a sell order. Treasury trades typically settle on the next business day.
Because the form travels by mail, allow time for delivery and processing; for a short bill, maturity may arrive before the transfer does. Opening and linking accounts is covered in the TreasuryDirect account guide, and the pros and cons of each place to buy in how to buy Treasury bills.
What price will a broker give you?
A broker pays the bid, the highest price a dealer will pay at that moment, which sits slightly below the ask price buyers pay; the gap is the bid-ask spread. Bills are usually quoted as a discount rate, so the bid shows as a slightly higher rate than the ask, which means a lower price. Notes and bonds are quoted as a price per $100 of face value, traditionally in 32nds of a point.
Some brokers also charge a commission or build a markup into the price. FINRA's rule requiring markups to be disclosed on trade confirmations covers corporate and agency bonds, not Treasuries, so your confirmation may not show one. Ask for the net price before you sell. To judge any quote, convert it into dollars:
- Bills. Each 0.01 percentage point of discount rate is worth face value × 0.0001 × days left ÷ 360, or about $0.25 per $10,000 with 91 days left.
- Notes. One 32nd of a point is $3.125 per $10,000 of face value.
- Small orders. A quote that is a few hundredths of a point worse than the market can cost more than the yield pickup you hoped to capture, so compare before accepting.
For a benchmark, Treasury publishes closing secondary-market bill rates every business day on its Daily Treasury Bill Rates page, and FINRA publishes end-of-day trade data for the most recently auctioned notes and bonds, updated the following morning. Neither covers every older issue, so quotes from more than one broker remain the best check. The term itself is defined in our glossary entry on the bid-ask spread.
What happens if you sell a 26-week bill early?
A bill's price climbs toward face value every day, so a sale halfway through usually shows a gain even if rates rise; rate moves only change its size. Take a $10,000 26-week bill bought at a 4.11% discount rate, the 26-week rate Treasury reported for October 30, 2026. With 182 days to maturity it costs $9,792.22, and holding it to the end would earn $207.78. After 91 days you sell it with 91 days left, and the buyer prices it at the going discount rate for that remaining term.
| Discount rate at sale, 91 days left | Sale price | Gain over $9,792.22 | Versus no change in rates |
|---|---|---|---|
| Rises to 4.50% | $9,886.25 | $94.03 | $9.86 less |
| Unchanged at 4.11% | $9,896.11 | $103.89 | none |
| Falls to 3.50% | $9,911.53 | $119.31 | $15.42 more |
Worked example: Pricing the 26-week bill at the sale date
- Rates up: $10,000 × (1 − 0.0450 × 91 ÷ 360) = $9,886.25, a gain of $94.03.
- Rates down: $10,000 × (1 − 0.0350 × 91 ÷ 360) = $9,911.53, a gain of $119.31.
- A 0.39-point rise cost under $10 against the no-change case, because only 91 days of interest were left to reprice.
- Sold after just 30 days, with 152 days left, the same bill would fetch less than its $9,792.22 cost only at a discount rate above about 4.92%.
The spread and any fee come off these figures. The reason prices fall as rates rise, and how term magnifies it, is worked through in why bond prices fall when rates rise.
What happens if you sell a 2-year note early?
A note reprices far more than a bill because a year or more of fixed coupons remains, so rising rates can push the sale price below face value. Suppose you bought a $10,000 2-year note at auction at par with an illustrative 4.50% coupon, paying $225 every six months. One year later, just after the second coupon, you sell it with two coupons and the principal still to come. Its price is what those payments are worth at the yield buyers then demand for one year.
| One-year yield at sale | Sale price | Gain or loss on the price | Total with $450 of coupons |
|---|---|---|---|
| Rises to 5.50% | about $9,903.98 | −$96.02 | $353.98 |
| Unchanged at 4.50% | $10,000.00 | $0 | $450.00 |
| Falls to 3.50% | about $10,097.43 | +$97.43 | $547.43 |
A one-point move in yields shifted the price by roughly 1%, about four times the effect per point on the bill above, because the note had a full year of payments left against the bill's 91 days. How notes pay and trade is covered in Treasury notes explained.
Selling between coupon dates adds one more line. The buyer also pays you the coupon interest earned since the last payment, known as accrued interest: about $112.50 on this note three months after a coupon. You report that amount as interest income, separately from the gain or loss on the price.
How is a Treasury sold before maturity taxed?
Federal tax depends on the security: a bill's gain is taxed mostly as interest, while a note's price change is a capital gain or loss. For a bill, IRS Publication 550 and the tax code treat any gain as ordinary income up to your ratable share of the acquisition discount, meaning the full discount multiplied by the days you held the bill and divided by the days from purchase to maturity. Anything above that is a short-term capital gain, since a bill is never held for more than a year, and a sale below cost is a capital loss.
Worked example: Tax on the 26-week bill sold after 91 days
- Full discount: $10,000 − $9,792.22 = $207.78. Ratable share after 91 of 182 days: $207.78 × 91 ÷ 182 = $103.89.
- Rates rose to 4.50%: the $94.03 gain is below $103.89, so all of it is ordinary income.
- Rates fell to 3.50%: the $119.31 gain splits into $103.89 of ordinary income and $15.42 of short-term capital gain.
- Either way, the tax falls in the year of the sale, not the year the bill would have matured.
For the 2-year note bought at par at auction, the coupons are interest taxed in the year received, and accrued interest the buyer pays you is interest too. The gain or loss on the price is a capital gain or loss, short-term unless you held the note for more than a year, so a sale exactly one year after purchase is still short-term. A note bought below face value in the secondary market can carry market discount, part of which is taxed as ordinary income when you sell.
States add a second layer. Treasury interest is exempt from state and local income tax under federal law, but states handle sales differently: Virginia lets residents subtract income from the sale of US obligations, while Massachusetts taxes gains on them as capital gains. Your broker reports the sale on Form 1099-B. The interest rules, Form 1099-INT and fund treatment are covered in are T-bills taxable.
Selling early vs holding to maturity
What selling early gets you
- Cash within about a business day of the trade at a broker
- A locked-in price gain if rates have fallen since you bought
- Money freed for a different term or another use
What selling early costs you
- The spread and any fee, which holding to maturity avoids
- Transfer paperwork and waiting time for TreasuryDirect holdings
- A price that may be lower than you expected if rates have risen
- More complex tax than the simple maturity-year rule
The comparison is mostly about time left and costs. With a few weeks to go, the price will be close to face value, so waiting usually costs little; with a year or more left on a note, the rate move since purchase dominates. If you only need part of the money, selling part of a position at a broker keeps the rest earning. What happens on the payment date if you hold is covered in what happens when a T-bill matures.
What are the risks of selling Treasuries early?
Selling turns a known payment at maturity into a market price, so the main risks are rate moves, costs, delays and tax. The broader question of what Treasuries do and do not protect against is covered in are Treasuries risk-free.
- Interest rate risk. Prices fall when yields rise, and the longer the time left, the bigger the move, as the note example shows. A short bill sold soon after purchase can also dip below cost after a sharp jump in rates.
- Timing risk. A transfer out of TreasuryDirect needs a certified paper form, the 45-day hold and a clear closed book window, and rates can move while the form is in the mail.
- Cost risk. Spreads, commissions and markups that do not have to be disclosed on Treasury confirmations can take a bigger bite out of small orders.
- Tax risk. Part of a bill's gain is ordinary income, note gains held a year or less are short-term, and some states tax gains that Treasury interest would have avoided.
- Reinvestment risk. If you sell because rates have fallen, the cash may have to be reinvested at those lower rates.
- Operational risk. Errors on the form can get it rejected, and a transfer cancels scheduled reinvestments you may have been counting on.
For other places to hold cash you may need before a fixed date, start from the Learn home page.