I Bond Calculator

The I Bond interest rate is a composite rate made up of two parts: a fixed rate (set at purchase and never changes) and an inflation-adjusted rate based on the CPI-U (Consumer Price Index). The composite rate formula is: Fixed Rate + (2 × Semi-annual Inflation Rate) + (Fixed Rate × Semi-annual Inflation Rate ÷ 100). The inflation component is updated every May and November by the U.S. Treasury. For bonds issued from November 2024 through April 2025 with a 0% fixed rate, the composite rate is 2.96% (semi-annual inflation of 1.48% × 2). Bonds issued with a 1.30% fixed rate earn 4.28% composite for that same period. Bonds with higher fixed rates will earn correspondingly more. To find the exact composite rate for your bond, visit TreasuryDirect.gov.

The annual purchase limit for I Bonds is $10,000 per person (Social Security Number) per calendar year through TreasuryDirect.gov. Additionally, you can purchase up to $5,000 per year in paper I Bonds using your federal income tax refund (Form 8888). A married couple can each buy $10,000 per year for a combined $20,000. Trusts, estates, and corporations can also purchase I Bonds under certain conditions. There is no minimum, though electronic bonds have a $25 minimum purchase. Unlike CDs or money market funds, these limits make I Bonds a supplement rather than a primary savings vehicle for most investors.

Yes, but with conditions. You cannot redeem an I Bond at all during the first 12 months — the money is locked up. After 12 months, you can redeem the bond at any time, but if you redeem before 5 years (60 months) have passed, you will forfeit the last 3 months of interest earned. For example, if you redeem a bond after 18 months, you only receive 15 months of interest. After 5 full years, you can redeem with no penalty whatsoever and keep all accrued interest. I Bonds reach final maturity after 30 years, at which point they stop earning interest entirely.

I Bond interest is subject to federal income tax but is exempt from state and local income taxes — a meaningful advantage over CDs and high-yield savings accounts in high-tax states. You have flexibility on when to pay federal tax: you can report interest each year as it accrues (cash basis), or defer all federal taxes until you redeem the bond or it reaches maturity at 30 years (the more common approach). When you redeem, you will owe federal income tax on all accrued interest. If the bonds are used to pay qualified higher education expenses at an eligible institution and you meet income requirements, the interest may be entirely tax-free under the Education Savings Bond Program. Consult a tax advisor for your specific situation.

I Bonds offer several unique advantages: they are backed by the U.S. government (zero default risk), their inflation-adjusted rate means your purchasing power is protected, state income taxes are waived, and interest compounds tax-deferred for up to 30 years. In 2022, when inflation peaked, I Bonds paid 9.62% — far exceeding any savings account. In 2025, with lower inflation, the composite rate of roughly 3–4% is competitive with some high-yield savings accounts but lags longer-term investments. The downsides are the $10,000 annual purchase limit, the 12-month lock-up period, and the 3-month interest penalty for early redemption before 5 years. I Bonds work best as part of an emergency fund or conservative savings allocation, particularly for investors in high state income tax brackets.

I Bonds, CDs, and high-yield savings accounts (HYSA) serve similar purposes but have different trade-offs. In early 2025, top-yielding CDs offer approximately 4–5% APY for 1-year terms, while HYSAs from online banks are paying around 4–5% APY. I Bonds currently yield around 3–4% annualized depending on your fixed rate. However, I Bonds have two structural advantages: their rate adjusts with inflation (protecting purchasing power over time) and interest is exempt from state and local taxes. CDs lock in a fixed rate — great when rates fall, but a disadvantage if inflation rises. HYSAs are fully liquid but their rates fluctuate with the federal funds rate. For a 5+ year horizon with concern about inflation, I Bonds remain a competitive option. For flexibility and current higher yields, CDs or HYSAs may be preferable.