Interest on Treasury notes is paid every six months. The payment dates are set from the note’s dated date at issue, listed in that security’s auction announcement, and they stay on the same twice-a-year rhythm until the note matures, when the last interest installment is paid together with the return of principal.1TreasuryDirect. Treasury Notes
The Six-Month Cycle
Every Treasury note pays semiannually, whether it’s a 2-year, 3-year, 5-year, 7-year, or 10-year note.1TreasuryDirect. Treasury Notes The coupon rate is fixed at auction and does not change, so each payment is the same dollar amount from the first one through the last.
Interest accrues from the note’s “dated date.” That’s usually the same as the issue date, though the two can differ by a day or two when the dated date falls on a weekend.2TreasuryDirect. Glossary for Treasury Marketable Securities Payments then land on the six-month and twelve-month anniversaries of that dated date. A note dated March 15 pays every September 15 and March 15 until maturity.
To confirm the exact dates for a note you own, check the auction announcement on TreasuryDirect or your brokerage statement.3eCFR. 31 CFR 356.30 – When Does the Treasury Pay Principal and Interest on Securities
How Much Arrives Each Time
A semiannual payment equals the face value times the coupon rate, divided by two. A $10,000 note with a 4.5% coupon pays $225 every six months.4TreasuryDirect. Understanding Pricing and Interest Rates The minimum purchase is $100, in $100 increments, so a $100 note with a 4% coupon delivers just $2 per payment.1TreasuryDirect. Treasury Notes
Two situations produce an irregular first payment. On a reopened note, one that shares a CUSIP with an earlier issue, the period between the dated date and the first coupon date may not be exactly six months, and the Treasury prorates that first payment accordingly. Every payment after it is a full semiannual amount. Separately, if you buy on the secondary market between coupon dates, you pay the seller for interest accrued since the last payment; that gets refunded to you when the next full coupon lands, so you net only the interest for days you actually held the note.
How the Money Reaches You
If your notes are held in a TreasuryDirect account, each payment is deposited electronically into the bank account you’ve linked for interest payments. You choose that destination when you set up or edit the purchase, and you can pick a different account for the final maturity payment.5TreasuryDirect. User Guide Sections 211 Through 220 Coupon payments themselves are not reinvested; only the maturity proceeds can be scheduled to roll into a new note.
If you hold notes at a brokerage, the Treasury sends the interest to the broker, which credits your cash balance. Most firms post the funds within a day of the scheduled payment date and show the credit in your transaction history. You can leave the cash there, withdraw it, or use it to buy something else.
When the Payment Date Falls on a Weekend or Holiday
If a scheduled interest date is a Saturday, Sunday, or a day the Federal Reserve is closed, the Treasury pays on the next business day. The amount doesn’t change, and no extra interest accrues for the delay.3eCFR. 31 CFR 356.30 – When Does the Treasury Pay Principal and Interest on Securities Federal holiday weekends are the usual reason a deposit slides one or two days into the following week.
The Final Payment at Maturity
On the maturity date, the Treasury pays the last semiannual coupon together with the note’s face value in a single deposit. A $10,000 note with a 4% coupon returns $10,200 that day: $10,000 in principal and $200 in final interest.3eCFR. 31 CFR 356.30 – When Does the Treasury Pay Principal and Interest on Securities Interest stops accruing after that. If you set up a reinvestment through TreasuryDirect, the proceeds roll straight into a new note of the same type and term; otherwise the money sits in your linked bank account until you do something with it.
Tax Timing
Interest is taxed federally but is exempt from state and local income tax.6Internal Revenue Service. Topic No. 403, Interest Received Any payer that sent you $10 or more of interest during the year issues a Form 1099-INT early in the following year, whether that’s TreasuryDirect or a brokerage.7Internal Revenue Service. About Form 1099-INT, Interest Income That’s the document you use to report the coupons you received during the tax year.