SGOV vs. T-Bills: Is the 0.09% Fee Worth It Over Buying Bills Yourself?

Rates move. Returns are for periods ending August 31, 2026; current rates are Treasury’s and iShares’ figures for October 5 and 6, 2026.

The short version

SGOV holds the same Treasury bills you could buy yourself and charges 0.09% a year to do it. Over the year to August 31, 2026, SGOV returned 3.78% and a modeled roll of 4-week bills returned 3.87%, a gap close to the fee. On $50,000 that is about $45 a year before tax and $30 to $40 after it, depending on your state. Bills you hold directly are fully exempt from state tax, where SGOV’s 2025 income was 95.14% exempt, and their interest is taxed when they mature, which can push it into the next tax year. SGOV’s advantages are that it sells in seconds at a 0.01% spread, needs no rolling, and never leaves cash waiting for an auction. For most cash balances under about $100,000 I would hold SGOV; above that, or for money with a known spending date, bills on auto-roll at a broker are worth the setup.

What you pay SGOV for

SGOV, the iShares 0-3 Month Treasury Bond ETF, holds Treasury bills that mature within three months, charges 0.09%, and had $114 billion in assets on October 6, 2026.¹ Buying the bills yourself costs nothing in fees: TreasuryDirect charges none, and Schwab, Fidelity and Vanguard charge $0 for Treasuries bought online, whether at auction or on the secondary market.²³⁴⁵ So the question is whether the fund does enough for you to justify 0.09% a year, about $45 on $50,000.

The gap in practice is close to the fee

Treasury publishes a daily coupon-equivalent yield for each bill term.⁶ Rolling a 4-week bill at those rates over the year to August 31, 2026 returned about 3.87%, and rolling 13-week bills about 3.89%. Over three years the 4-week roll returned 4.65% a year. SGOV returned 3.78% for the year and 4.59% a year for three years, compounded from iShares’ monthly NAV returns.¹ The same compounding reproduces iShares’ published returns to September 30, 2026 (3.74% and 4.54%), and over that window the 4-week roll returned 3.82%.

Period ending	Rolling 4-week bills	SGOV	Gap
1 year, Aug 31, 2026	3.87%	3.78%	0.09
1 year, Sep 30, 2026	3.82%	3.74%	0.08
3 years a year, Aug 31, 2026	4.65%	4.59%	0.06

Bills: a 4-week bill bought every 28 days at Treasury’s daily coupon-equivalent rate, with no cash idle between rolls. SGOV: NAV total return, net of its 0.09% fee. Sources: U.S. Treasury, iShares.

The bill figures are a model: they use Treasury’s daily market rates rather than auction results, and assume every dollar is reinvested the day the last bill matures. A real roll loses a little to the days cash waits for an auction, covered below, so the true gap was probably a few hundredths of a point smaller than the table shows.

Why SGOV’s quoted yield looks lower right now

On October 6, 2026 a 4-week bill yielded 3.95% and a 13-week bill 4.14%, while SGOV’s 30-day SEC yield was 3.71%.⁶¹ That gap is mostly timing. The SEC yield looks back 30 days, and bill rates rose about two-tenths of a point in September, from 3.72% to 3.95% on the 4-week bill. For a current comparison, use SGOV’s average yield to maturity, 3.95% on October 5, minus its 0.09% fee.¹

Tax: two small edges for direct bills

Interest on Treasury bills is exempt from state and local income tax by federal law.⁷ A fund passes that exemption through only in proportion to its Treasury income, and in California, Connecticut and New York only if it held at least half its assets in U.S. obligations at every quarter end. SGOV qualified, with 95.14% of its 2025 income from U.S. government obligations.⁸ The other 4.86% is state-taxable, which at California’s 9.3% rate costs about $9 a year on $50,000.

The second edge is timing. An individual reports a bill’s discount as interest in the year the bill matures or is sold.⁹¹⁰ A 13-week bill bought in early November 2026 matures in February 2027, and its interest goes on the 2027 return. A fund has to accrue the same discount daily and pays it out monthly, so SGOV’s income is taxed in the year it is earned.¹¹ The deferral is a one-time shift of a few weeks’ interest into the next year, worth something mainly if your rate will be lower then.

Both are taxed federally as ordinary income, and both count toward the 3.8% net investment income tax. Bill interest is reported on Form 1099-INT, box 3; SGOV’s distributions are ordinary dividends on Form 1099-DIV.¹²

Run your own numbers

The calculator starts from the past year’s returns, 3.87% for rolled bills and 3.78% for SGOV, and applies each one’s state exemption. Change them to current rates if you prefer.

What SGOV does that bills do not

It sells instantly at a known cost. SGOV’s median bid-ask spread was 0.01% in early October 2026.¹ A bill sold before maturity goes at whatever bid a dealer offers. Fidelity says Treasuries sold early “are subject to a trading mark-down,” and Schwab does not accept limit orders on individual bonds.¹³¹⁴ No broker publishes the size of that markdown.
It never waits for an auction. A 4-week bill auctioned on Thursday, October 1, 2026 was issued the following Tuesday, and an order placed when the auction was announced waits up to a week for the bill.¹⁵ Each new deposit you put into bills sits in the sweep until then. SGOV is bought the day the money arrives.
It needs no maintenance. Bills mature, and the money returns to cash unless a roll is set up. Auto-roll features cap what they reinvest: Schwab’s rolls the same face value and leaves the interest in cash, and Fidelity’s works the same way.¹⁶¹³ Adding money means buying a new bill.
It takes any amount above one share. Bills come in $100 multiples at TreasuryDirect, and Vanguard requires $1,000 per Treasury.¹⁷⁵

Where you buy bills matters

At a broker the bills sit next to your other investments, cost nothing online, and can be sold before maturity. Schwab’s Auto-Rollover handles 4-, 8-, 13-, 17- and 26-week bills bought at auction, up to $5 million.¹⁶ Fidelity’s Auto Roll covers every bill term but stops if you add to or sell part of the position.¹³ I could not find a Vanguard page describing an automatic roll for Treasuries.

TreasuryDirect has no fees and a $100 minimum, and can reinvest a maturing bill into the same term for up to two years.¹⁸ It cannot sell anything. To sell before maturity you must transfer the bill to a broker, and a newly bought bill has to be held 45 days first, so a 4-week bill there cannot be sold at all.¹⁹ From October 29, 2026, logging in also requires ID.me.²⁰ TreasuryDirect suits money you will hold to maturity and want outside a brokerage account.

When buying bills yourself is worth it

Large balances. The fee is a fixed 0.09%, so the dollar savings grow with the balance: about $90 a year on $100,000 and $450 on $500,000 before tax, at the past year’s rates.
Money with a date. A tax payment due in April or a down payment due in March can be matched to a bill maturing just before it, so the price on the day you need the money is known in advance.
High state taxes. The 4.86% of SGOV’s income that was state-taxable for 2025 adds a little to the fee in California or New York, and nothing in Texas or Florida.

SGOV is the better tool for an emergency fund, for money you add to often, and for anyone who will not reliably reinvest maturing bills. A deposit that waits a week in a sweep paying 0.01% for an auction gives up about 0.075% of its value at a 3.9% bill rate, close to a full year of SGOV’s fee on the same money.

Key takeaways

SGOV trailed a roll of 4-week bills by about its fee: 3.78% against 3.87% in the year to August 31, 2026, and 4.59% against 4.65% a year over three years.
On $50,000 that was about $45 a year before tax and $30 to $40 after, depending on your state.
Direct bills are fully state-exempt and taxed at maturity; SGOV was 95.14% state-exempt for 2025 and taxed as it earns.
SGOV sells at a 0.01% spread, never waits for an auction and needs no rolling. Early bill sales carry an undisclosed markdown, and TreasuryDirect cannot sell at all.
Buy bills for large or dated money; hold SGOV for cash you add to or might need on short notice.

How Summitward helps

Cash tracker

Enter your cash positions, including Treasury bills and SGOV, and see what each yields after your own federal and state rates.

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Frequently asked questions

Is SGOV the same as owning T-bills?

Almost. It holds Treasury bills maturing within three months, so its credit risk and yield track theirs, less the 0.09% fee. The differences are tax treatment, which is close to full state exemption and taxed as earned, and that you own fund shares that trade on an exchange rather than the bills themselves.

Are T-bills better than SGOV for state taxes?

Slightly. Bill interest is fully exempt from state and local tax. SGOV’s 2025 income was 95.14% exempt, and it met the California, Connecticut and New York holdings test, so residents of those states get the same 95.14%.

Can I sell a T-bill before it matures?

At a broker, yes, at the dealer’s bid, which includes a markdown no broker publishes. A bill held at TreasuryDirect has to be transferred to a broker first, and only after 45 days. Any gain up to the interest accrued while you held it is taxed as ordinary interest.⁹

Do brokers charge to buy T-bills?

Not online at Schwab, Fidelity or Vanguard, at auction or on the secondary market. Broker-assisted orders cost $19.95 at Fidelity and $25 at Schwab, and a secondary-market price can include a markup.³⁴

What about a Treasury money market fund?

Funds such as VUSXX and SNSXX hold Treasuries at a $1.00 price. Vanguard’s VUSXX charges 0.07%, slightly less than SGOV, with a $3,000 minimum; Schwab’s SNSXX charges 0.34%. Both were close to fully state-exempt for 2025. The comparisons are in VUSXX vs. VMFXX and SWVXX vs. SGOV.

Related guides

SGOV vs. VBIL: two Treasury bill ETFs, one of them cheaper.
What Percent of SGOV Is State Tax Exempt?: 2025 state-exempt percentages for 15 cash funds.
SWVXX vs. SGOV: a prime money fund against the bill ETF at Schwab.
SGOV vs. HYSA: the bill ETF against a high-yield savings account.
Do T-Bills Beat Inflation?: the 1928-2025 record of bills against inflation.
SGOV vs. T-Bills vs. HYSA at a glance: the one-page comparison.

Sources

iShares, SGOV fund page and data download: monthly NAV total returns, published returns to September 30, 2026, 30-day SEC yield, average yield to maturity, median bid-ask spread, net assets, expense ratio. ishares.com
TreasuryDirect, marketable securities FAQs (“There are no fees charged when you open an account or buy securities”). treasurydirect.gov
Charles Schwab, Pricing Guide for Individual Investors, April 2026 (Treasuries, secondary and auction: $0 online, $25 broker-assisted). schwab.com
Fidelity, Brokerage Commission and Fee Schedule, September 2026 (U.S. Treasury auction and secondary: no charge online, $19.95 rep-assisted). fidelity.com (PDF)
Vanguard Brokerage Services commission and fee schedules, effective July 10, 2026 (U.S. Treasuries $0 new issue and secondary; $1,000 minimum). vanguard.com (PDF)
U.S. Department of the Treasury, Daily Treasury Bill Rates, 2023-2026 (coupon-equivalent columns). treasury.gov
31 U.S.C. § 3124(a), exemption of U.S. obligations from state and local taxation. law.cornell.edu
BlackRock, “2025 iShares U.S. Government Source Income Information” (SGOV 95.14%; quarterly 50% marker). ishares.com (PDF)
IRS Publication 550, Investment Income and Expenses (2025), “Treasury bills” and “Short-term government obligations.” irs.gov
26 U.S.C. § 454(b), short-term discount obligations: discount does not accrue until paid at maturity, sold or otherwise disposed of. law.cornell.edu
26 U.S.C. § 1281, current inclusion of acquisition discount for short-term obligations held by, among others, a regulated investment company. law.cornell.edu
IRS, Instructions for Forms 1099-INT and 1099-OID, box 3, “Interest on U.S. Savings Bonds and Treasury Obligations.” irs.gov
Fidelity, Auto Roll FAQs and program page (eligible terms; same face value and term; early sales subject to a trading markdown). fidelity.com
Charles Schwab, fixed income FAQs (selling before maturity; no limit orders on individual bonds). schwab.com
TreasuryDirect, “When Auctions Happen,” and the auction announcement for 4-week bill CUSIP 912797VP9 (auctioned October 1, issued October 6, 2026). treasurydirect.gov
Charles Schwab, CD and Treasury Auto-Rollover (eligible bill terms, $5,000,000 limit, interest not reinvested). schwab.com
TreasuryDirect, Treasury Bills (terms, $100 minimum and increments). treasurydirect.gov
TreasuryDirect, Reinvesting a Marketable Security (same term; reinvestments up to two years). treasurydirect.gov
TreasuryDirect, Selling Marketable Securities (transfer required; 45-day hold; a 4-week bill cannot be sold or transferred). treasurydirect.gov
TreasuryDirect home page (ID.me required for login from October 29, 2026), read October 6, 2026. treasurydirect.gov

Author disclosure

I have no relationship with BlackRock or any broker named here. The bill returns are my model, built from Treasury’s published daily rates as described above; SGOV’s returns are compounded from iShares’ own monthly figures. Nothing here is tax advice.