SGOV vs. VBIL: What Vanguard's Cheaper T-Bill ETF Is Worth

Yields move daily. The figures here are each issuer’s published numbers in early September 2026, and the government-obligation percentages are for tax year 2025, republished every January. The framework does not move.

Vanguard launched VBIL on February 7, 2025 and it now holds about $11.4 billion.¹ SGOV, which has been running since May 2020, holds about $107.5 billion.² Both own Treasury bills maturing inside three months, both carry an effective duration near 0.1 years, and both distribute monthly. On the thing most people buy a cash ETF for, they are the same product.

The interesting question is whether the differences that do exist add up to enough to act on, and the honest answer is that they are small and depend on where you live.

Where the two funds differ

The expense ratio is already in the yield

A published SEC yield is calculated net of fund expenses. So when VBIL shows 3.65% and SGOV shows 3.63%, the 3 basis point fee difference is part of what produced that 2 basis point gap. Adding the fee saving on top would count it twice, which is the most common error in write-ups of this pair.

The two basis points is also smaller than the fee gap, which is what you would expect from funds tracking slightly different bill baskets on different days. Treat the yield difference as roughly the fee difference and no more.

The state-tax difference is the part that gets missed

Interest from direct Treasury obligations is exempt from state income tax. Each January every fund sponsor publishes what share of the previous year’s income qualified. For 2025 Vanguard reported 100.00% for VBIL.³ iShares reported 95.14% for SGOV.⁴

That means a holder in a state with income tax owes tax on about 4.86% of SGOV’s income and on none of VBIL’s. At a 9.3% California rate on a 3.63% yield, the drag works out near 1.6 basis points. Small, but it is the same order of magnitude as the yield gap itself, which makes the tax treatment roughly half the story rather than a footnote.

Both funds clear the separate hurdle that California, Connecticut and New York impose, which requires a fund to hold at least half its assets in government obligations at the end of every quarter before any of the income is exempt.³ Funds that miss it lose the exemption entirely for residents of those three states, which is what happens to SPAXX and is covered in the SPAXX comparison. Neither fund here has that problem.

Run your own numbers

Set your balance, state and account type. The calculator splits the result into the part coming from yield and the part coming from tax treatment, and separately prices what it would cost to move an existing SGOV position.

New money and existing money are different questions

If you are deciding where to put a fresh deposit, VBIL wins on the numbers above and there is nothing to weigh against it. The decision takes a few seconds and costs nothing.

If you already hold SGOV in a taxable account, selling is a realization event. What saves this from being the usual "do not switch" answer is that a Treasury bill fund holds almost no unrealized gain. It accrues interest and pays it out monthly, so the share price rarely drifts more than about one month of interest above what you paid. On $100,000 that is a few hundred dollars of gain and perhaps $75 of tax, which the advantage recovers in a year or two rather than never.

In an IRA or 401(k) none of the tax reasoning applies and the choice collapses to the two basis point yield gap, which is close to noise.

Where SGOV still has the better case

Size and age both favor SGOV, and neither shows up in a yield comparison. At roughly ten times VBIL’s assets and five years of history against about eighteen months, SGOV trades with more depth and has been through more market conditions. For a large balance moved in and out frequently, the bid-ask spread you actually pay can matter more than a two basis point yield difference.

SGOV is also the more common holding, which matters if you are choosing a pair to harvest losses between. That is a thinner argument than it sounds, though, because a fund whose price barely moves rarely generates a loss worth harvesting.

When this decision does not matter

Below roughly $25,000 the whole difference is a few dollars a year and is not worth the attention. Inside a retirement account it is smaller still. If your cash is in a bank account earning materially less than either fund, the gap between a bank and a Treasury fund dwarfs the gap between these two, and the cash-parking guide is the more useful place to start.

Key takeaways

• The yield gap already includes the fee gap. VBIL yielded 3.65% to SGOV’s 3.63% on September 3, 2026, net of both funds’ expenses. Do not add the 3 basis point fee saving on top.
• State tax is about half the difference. VBIL reported 100% of 2025 income from government obligations against SGOV’s 95.14%, worth roughly another 1.6 basis points at a 9.3% state rate.
• The total is small and depends on where you live. For one modeled California holder it is about $36 a year on $100,000, and about $20 in a state with no income tax.
• Switching costs less here than for most ETF pairs. A bill fund distributes monthly, so it carries almost no unrealized gain.
• SGOV keeps the liquidity argument. Ten times the assets and five years of history against eighteen months.

How Summitward helps

Frequently asked questions

Is VBIL better than SGOV?

For new money in a taxable account, marginally. It charged 0.06% against 0.09%, yielded 3.65% against 3.63% on September 3, 2026, and reported 100% of 2025 income as Treasury interest against 95.14%. For one modeled California holder that came to about $36 a year on $100,000. In a retirement account the difference is about two basis points.

Should I sell SGOV to buy VBIL?

Check the unrealized gain first. Because a Treasury bill fund pays out its interest monthly, the price rarely sits far above your basis, so the tax on switching is usually small and often recovered within a year or two. That is different from switching between stock funds, where an embedded gain can take decades to justify.

Why does SGOV show 95.14% and VBIL 100%?

Both hold Treasury bills, but the percentages reflect what each fund’s income consisted of over the year, including any cash management around the edges. Only the Treasury portion is exempt from state income tax, so the 4.86% difference is taxable at your state rate if you hold SGOV.

Does VBIL have enough assets to be safe?

At about $11.4 billion it is well past the level where closure is a realistic worry. The practical question with a smaller fund is trading cost rather than survival, and for a fund holding Treasury bills the underlying market is deep enough that spreads stay tight.

Which is better for a state with no income tax?

The tax difference disappears, so the comparison is just the yield gap, about two basis points or $20 a year on $100,000. At that level either one is defensible.

Related guides

• SPAXX vs. SGOV: the same after-tax framework applied to cash sitting at Fidelity.
• SGOV vs. USFR: bills against floating rate notes, and when the difference shows up.
• Where to Park Your Cash: the layer above this one, covering savings accounts and munis.
• SGOV vs. VBIL at a glance: the short version if you only want the table.

Sources

1. Vanguard, “Vanguard 0-3 Month Treasury Bill ETF (VBIL),” fund profile read September 7, 2026 (inception February 7, 2025; expense ratio 0.06% as of April 28, 2026; net assets $11.4 billion as of August 31, 2026; effective duration 0.1 years; 30-day SEC yield 3.65% as of September 3, 2026). investor.vanguard.com
2. iShares, “iShares 0-3 Month Treasury Bond ETF (SGOV),” fund page read September 7, 2026 (expense ratio 0.09%; net assets $107.5 billion as of September 4, 2026; 30-day SEC yield 3.63% as of September 3, 2026; inception May 26, 2020). ishares.com
3. Vanguard, “U.S. government obligations income information,” tax year 2025 (VBIL 100.00%; statement of the California, Connecticut and New York requirement that 50% of assets be in US government obligations at each quarter end). investor.vanguard.com
4. BlackRock, “2025 U.S. Government Source Income Information,” iShares (SGOV 95.14%, marked as meeting the quarterly threshold). ishares.com (PDF)

Author disclosure

I hold Treasury bill funds for cash and have no position in or relationship with either sponsor. Every figure above is each issuer’s own published number on the date given. Yields move daily; the government-obligation percentages change once a year. Nothing here is tax advice, and state treatment in particular depends on facts this article cannot see.