A bond is a loan you make to a government or company. It pays you interest (the coupon) on a schedule and pays back the face value on the maturity date, if the issuer doesn't default (Investor.gov). If you sell before maturity, the price can be higher or lower than you paid, mostly because of interest rates. This page explains price, yield and duration in plain English, compares Treasuries, TIPS, munis, corporate bonds and bond funds, and lets you run the numbers.
Checked Oct. 24, 2026
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| Maturity | Yield |
|---|---|
| 2-year note | 4.65% |
| 5-year note | 4.78% |
| 10-year note | 4.96% |
| 30-year bond | 5.29% |
Market yield on constant-maturity Treasuries, as of 2026-10-22 (US Treasury via FRED; our daily snapshot). All maturities: Treasury rates today.
| Type | Who pays you | Taxes on interest | Main risks / notes |
|---|---|---|---|
| Treasury notes and bonds | U.S. government. Notes: 2, 3, 5, 7 or 10 years; bonds: 20 or 30 years; coupon every 6 months; $100 minimum at TreasuryDirect | Federal yes; no state or local (31 U.S.C. 3124) | Interest rate risk if sold early |
| TIPS | U.S. government; 5, 10 or 30 years; principal rises with inflation and falls with deflation | Federal tax each year on interest, and principal increases can be taxable that year; no state or local | At maturity you get the inflation-adjusted principal or the original, whichever is more (TreasuryDirect) |
| Municipal bonds (munis) | States, cities, counties and other public bodies (general obligation or revenue bonds) | Usually no federal tax (26 U.S.C. 103); may be state-tax-free in the issuing state; some private activity bond interest counts for the AMT (26 U.S.C. 57(a)(5)) | Credit, rate and call risk; issuer filings free on EMMA |
| Investment-grade corporate | Companies; secured, senior or subordinated, which sets your place in line in a bankruptcy | Federal and state | Default, rate, call, inflation and liquidity risk (SEC) |
| High-yield (“junk”) corporate | Companies with lower credit ratings | Federal and state | Higher interest to make up for more default risk |
| Zero-coupon bonds | Bought at a discount (SEC example: $800 for a 5-year, $1,000 bond); no interest until maturity | Usually taxed each year on part of the discount (original issue discount) before you get it | Highest rate risk for the maturity |
Savings bonds are different: they aren't sold on the market. See I bonds. Short-term Treasury bills: T-bills vs savings.
Federal brackets are the 2026 rates (10% to 37%, IRS Rev. Proc. 2025-32); see 2026 brackets to find yours.
When a broker sells you a bond from its own inventory, the price usually includes a markup (a markdown when you sell); that is the firm's pay (FINRA). For corporate and agency bonds, if the firm bought the bond the same day it sold it to you, your trade confirmation must show the markup in dollars and as a percent of the market price (FINRA Rule 2232(c)). Ask for the yield reflecting broker compensation, and check recent trade prices for the bond on FINRA Data (corporate, agency, Treasury) or EMMA (munis). Treasuries can also be bought with no markup at TreasuryDirect auctions.
Facts, not investment advice. We republish SEC, FINRA, Treasury and IRS information with dates and do the arithmetic. We don't recommend any bond or fund. No partner links on this page.
A bond's coupon is fixed. When new bonds pay more, buyers will only take an older, lower-coupon bond at a lower price. The SEC's example: a 10-year Treasury with a 3% coupon is worth about $925 a year later if market rates rise to 4%, and about $1,082 if they fall to 2%.
The yearly return you'd earn if you buy at today's price, hold to maturity and every payment is made. If you pay less than face value, yield to maturity is above the coupon rate; if you pay more, it's below.
A measure, in years, of how sensitive a bond's price is to interest rates. FINRA's rule of thumb: a bond or bond fund with a duration of 10 would fall about 10% if rates rise 1 percentage point, and rise about 10% if they fall 1 point. A fund's duration is on its fact sheet.
Yes. The SEC says bond funds carry credit, interest rate and prepayment risk, and you can lose money even in funds that hold only insured bonds or U.S. government bonds. A fund has no maturity date that returns your principal.
Interest on most state and local bonds is left out of federal income (26 U.S.C. 103), but not on private activity bonds that aren't qualified, and interest on specified private activity bonds counts for the alternative minimum tax. Your own state may also tax munis from other states. Tax-exempt interest still has to be reported and counts when figuring how much Social Security is taxed.
No. Interest on Treasury bills, notes and bonds is subject to federal income tax but exempt from state and local income tax (31 U.S.C. 3124; IRS Tax Topic 403).
Estimates, not financial advice. Taxes, insurance, PMI and fees vary by lender, county and city; confirm with your lender, dealer and state agency before acting.