I bonds, officially Series I savings bonds, are U.S. Treasury savings bonds whose interest rate combines a fixed rate with an inflation rate that resets every six months. You buy them electronically through TreasuryDirect, the Treasury’s website for individual investors, starting at $25.
This guide explains how the I bond composite rate is calculated, where to find the rate for the current six-month period, how much you can buy, the rules for cashing out early, how the interest is taxed, and the steps to buy I bonds on TreasuryDirect.
Key takeaways
- An I bond’s composite rate combines a fixed rate, which never changes for that bond, with an inflation rate that is reset every six months.
- Treasury announces new rates on May 1 and November 1. Check TreasuryDirect for the rate on bonds issued from November 1, 2026; the previous period’s bonds (May 1 to October 31, 2026) got a 4.26% composite rate, including a 0.90% fixed rate.
- You can buy up to $10,000 in electronic I bonds per calendar year for yourself, from a $25 minimum.
- You must hold an I bond for at least 12 months; cashing in before 5 years costs the last 3 months of interest.
- Interest is subject to federal income tax but exempt from state and local income tax.
What are I bonds?
I bonds are savings bonds issued by the U.S. Department of the Treasury. According to TreasuryDirect’s comparison of EE and I bonds, they earn interest for up to 30 years unless you cash them in sooner. They earn interest monthly, and the interest is compounded every six months, meaning each six months the rate is applied to a new principal that includes the interest already earned.
Treasury also says the interest rate on an I bond will never fall below zero. In other words, the combined rate cannot drop below 0%.
I bonds are Treasury securities, not bank deposits. The FDIC’s Deposit Insurance at a Glance says Treasury bills, bonds and notes are not FDIC-insured but are backed by the full faith and credit of the U.S. government; our guide to FDIC insurance explains the difference.
How the I bond composite rate works
Each I bond earns a single “composite” rate made up of two parts, as explained on TreasuryDirect’s I bonds interest rates page:
- Fixed rate. Set when you buy the bond and stays the same for the bond’s whole life.
- Inflation rate. A semiannual rate that Treasury resets every six months based on changes in the Consumer Price Index for All Urban Consumers (CPI-U).
Treasury combines them with this formula:
Composite rate = [fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]
Worked example using an official rate
For bonds issued from May 1, 2026 to October 31, 2026, Treasury set a fixed rate of 0.90% and a semiannual inflation rate of 1.67%. Plugging those into the formula:
- 0.0090 + (2 x 0.0167) + (0.0090 x 0.0167)
- = 0.0090 + 0.0334 + 0.0001503
- = 0.0425503, which rounds to 4.26%
When your rate changes
Your bond’s rate does not change on one calendar date for everyone. It changes every six months from the bond’s issue month. Treasury announces new inflation rates on May 1 and November 1. For example, a bond issued in May gets a new rate each November 1 and May 1. The new fixed rate announced on those dates applies only to bonds issued during the following six months; it does not change the fixed rate on bonds you already own.
As a hypothetical example, a bond bought in May 2026 earned the 4.26% composite rate for its first six months. Starting November 1, 2026, it keeps its 0.90% fixed rate but combines it with the new inflation rate that Treasury announced for that date.
Current and previous I bond rates
Current period: bonds issued November 1, 2026 through April 30, 2027. Under Treasury’s schedule, new fixed and inflation rates apply to bonds issued in this period. We could not confirm the new figures on an official Treasury page when we last checked this guide, so we do not list them here. Check the I bonds interest rates page on TreasuryDirect for the composite rate that applies to bonds you buy now, and use the formula above to see how it is calculated.
Previous period: bonds issued May 1 through October 31, 2026. Treasury’s May 1, 2026 rate announcement set these rates, which no longer apply to new purchases:
| Rate component | Previous period: bonds issued May 1 – October 31, 2026 |
|---|---|
| Composite rate (first six months) | 4.26% |
| Fixed rate (for the life of the bond) | 0.90% |
| Semiannual inflation rate | 1.67% |
That announcement said the 1.67% semiannual inflation rate reflected the change in the CPI-U from September 2025 to March 2026, which equals 3.34% on an annual basis.
As a rough hypothetical using that previous-period rate, at a 4.26% composite rate, a $1,000 bond would earn about $21.30 in its first six months ($1,000 x 4.26% / 2). Actual values are calculated by Treasury and depend on the rates that apply to your bond.
How much you can buy: I bond purchase limits
TreasuryDirect’s buying savings bonds page sets these rules for electronic bonds:
- Minimum: $25, and you can buy in any amount above that to the penny.
- Annual limit: up to $10,000 in electronic I bonds per calendar year for yourself as owner. This is separate from the $10,000 limit for Series EE bonds.
- Gifts and children: bonds you buy for a child or as gifts are separate from your own $10,000 limit.
Paper I bonds bought with a federal tax refund are no longer an option. The current IRS Form 8888 (revised December 2025) says the ability to buy paper bonds with your refund has been discontinued and that the form is now used only to split a direct-deposit refund.
Holding period and early redemption penalty
I bonds are meant for money you can leave alone for a while. Treasury’s rules are:
- First 12 months: you cannot cash in the bond at all.
- After 12 months but before 5 years: you can cash it in, but you lose the last 3 months of interest. For example, if you cash in after 18 months, you receive the first 15 months of interest.
- After 5 years: there is no penalty.
- At 30 years: the bond stops earning interest.
Because of the 12-month lockup, I bonds are not a substitute for cash you may need right away. Our guide on how to build an emergency fund covers more accessible places to keep short-term savings.
How I bond interest is taxed
TreasuryDirect lists the tax treatment of I bond earnings as:
| Tax | Applies to I bond earnings? |
|---|---|
| Federal income tax | Yes |
| State and local income tax | No |
| Federal estate, gift and excise taxes | Yes |
| State estate or inheritance taxes | Yes |
You can choose to report the interest each year, or report it all when you cash in the bond or it stops earning interest.
Using I bonds for education
Interest may be excluded from federal income tax if you use it for qualified higher education expenses. The IRS handles this through the education savings bond program and Form 8815, as described in IRS Publication 970. The exclusion is phased out at higher incomes: for tax year 2025, the phaseout range was modified adjusted gross income of $99,500 to $114,500, or $149,250 to $179,250 on a joint return, and no interest can be excluded above the top of the range. TreasuryDirect also notes that bonds used for higher education must be in an adult’s name, not the child’s. For another way to save for school, see our guide to 529 plans.
How to buy I bonds on TreasuryDirect
To own a savings bond, you must have a Social Security Number and be a U.S. citizen (living in the U.S. or abroad), a U.S. resident, or a civilian employee of the U.S. government, according to TreasuryDirect. Then:
- Open or log in to your TreasuryDirect account at TreasuryDirect.gov. Type the address yourself rather than following links in emails or texts; see our reader safety page for scam warning signs.
- Choose BuyDirect and select Series I.
- Enter the registration, meaning who will own the bond, and the purchase amount (from $25, to the penny).
- Review and submit the purchase.
TreasuryDirect also offers a payroll savings option, where your employer sends part of each paycheck to your TreasuryDirect account by direct deposit and bonds are issued once the balance covers the amount you chose. To buy for a child, an adult custodian can open a child’s account linked to their own; others can send gift bonds to that linked account.
Note: This article is general information, not financial, tax or legal advice. Rates and rules can change, so confirm details on TreasuryDirect or with a qualified professional. See our Disclaimer.
Frequently asked questions
What is the I bond rate right now?
Treasury announces new I bond rates each May 1 and November 1, so bonds issued from November 1, 2026 through April 30, 2027 get the rates from the November announcement, posted on TreasuryDirect’s I bonds interest rates page; check that page for the current figures. The previous period’s bonds, issued May 1 to October 31, 2026, received a 4.26% composite rate with a 0.90% fixed rate.
Can I lose money on I bonds?
Treasury guarantees that an I bond’s interest rate will never fall below zero. However, if you cash in before 5 years, you give up the last 3 months of interest, and you cannot cash in at all during the first 12 months.
How much can I invest in I bonds each year?
You can buy up to $10,000 in electronic I bonds per calendar year for yourself. Purchases for a child or as gifts are separate from that limit. Paper I bonds through a tax refund are no longer available, according to IRS Form 8888.
Do I pay state tax on I bond interest?
No. I bond interest is exempt from state and local income tax but subject to federal income tax. You can report it every year or when you cash in the bond.
Does the fixed rate ever change?
Not on a bond you already own. The fixed rate is set when the bond is issued and stays the same for its life. Only the inflation part of your rate changes every six months.
Official sources
- I bonds interest rates – TreasuryDirect, U.S. Department of the Treasury
- Fiscal Service Announces New Savings Bonds Rates, Series I to Earn 4.26% (May 1, 2026) – TreasuryDirect, U.S. Department of the Treasury
- Comparing EE and I bonds – TreasuryDirect, U.S. Department of the Treasury
- Buying savings bonds – TreasuryDirect, U.S. Department of the Treasury
- Deposit Insurance at a Glance – Federal Deposit Insurance Corporation
- Form 8888, Allocation of Refund – Internal Revenue Service
- Publication 970, Tax Benefits for Education – Internal Revenue Service
Last checked: November 6, 2026. We review this guide when the official rules change.