A Treasury Note is a short-term debt obligation issued by the U.S. government. Treasury Notes are issued with maturities ranging from 2 to 10 years and are backed by the full faith and credit of the U.S. government.
Treasury Notes pay interest income every six months. The interest income is taxable for federal income tax purposes, but is tax-exempt for U.S. state income tax purposes. The interest income is reported to the holder on Form 1099-INT (Interest Income).
Investors can purchase and hold Treasury Notes until maturity or sell them to another party. The Treasury Direct website provides more information and instructions on how to purchase a Treasury Note, Treasury Bill, or Treasury Bond.