I bonds explained
A Series I savings bond is an inflation-protected US Treasury bond. It earns a composite rate = a fixed rate (locked for the life of the bond) plus a semiannual inflation rate (reset every May and November from CPI-U). Today’s rate is 4.26%. You buy $25–$10,000 per person per year at TreasuryDirect, cannot cash for 12 months, lose 3 months of interest if you cash before 5 years, and the bond stops earning after 30 years. Interest is exempt from state and local tax and federal tax can be deferred until you redeem.
Source: TreasuryDirect. Data as of May 2026.
How an I bond works, step by step
| Step | What happens |
|---|---|
| 1. Earn two rates | A fixed rate (set for the bond's life) + a semiannual inflation rate (reset every 6 months). |
| 2. Composite rate | Treasury combines them: fixed + (2 x inflation) + (fixed x inflation), floored at 0%. |
| 3. Buy | $25 to $10,000 per person per year, electronically at TreasuryDirect. |
| 4. Hold | Cannot cash in the first 12 months; 3-month interest penalty if cashed before 5 years. |
| 5. Mature | Stops earning interest after 30 years. |
| 6. Tax | Federal tax only (deferrable to redemption); exempt from state & local tax. |
Source: TreasuryDirect. Data as of May 2026.
The composite rate
The headline number on an I bond is the composite rate, computed with the Treasury formula
fixed + (2 × semiannual inflation) + (fixed × semiannual inflation), floored at 0%.
The fixed rate never changes once you buy; the inflation rate changes every 6 months. See the
composite-rate calculator and the
full composite history.
Buying, holding and cashing
- Buy: $25–$10,000 per person per calendar year via TreasuryDirect. See purchase limits.
- Hold: a mandatory 12-month minimum; interest accrues monthly and compounds semiannually (details).
- Cash: after 12 months, but a 3-month interest penalty applies before 5 years.
- Tax: federal-only, with an education exclusion.
Frequently asked questions
What is a Series I savings bond?
A Series I bond is a low-risk US Treasury savings bond designed to protect your money from inflation. It earns a composite rate made of a fixed rate plus an inflation rate that resets every 6 months. It is backed by the full faith and credit of the US government.
How much do I bonds pay right now?
I bonds issued May 2026 - October 2026 pay a composite rate of 4.26% (a 0.90% fixed rate plus a 1.67% semiannual inflation rate).
Are I bonds safe?
I bonds carry no market or default risk — they are backed by the US Treasury and the composite rate can never fall below 0%, so you never lose nominal principal. The main risks are interest-rate opportunity cost and the 1-year lock-up.
How do I buy an I bond?
Open a free account at TreasuryDirect.gov and buy electronically (minimum $25). The annual limit is $10,000 per Social Security Number. There are no fees and no secondary market — you buy from and redeem to the Treasury directly.
Next steps
Not investment or tax advice. BondValue is an independent reference, not affiliated with the U.S. Treasury or TreasuryDirect. Savings bond rates reset every 6 months (on May 1 and November 1), and any value shown here is an estimate. Verify current rates and the exact penny value of your bonds at TreasuryDirect’s official Savings Bond Calculator. Consult a qualified professional before making financial decisions.
Last updated: 2026-06-21