I Bonds are inflation-protected savings bonds issued by the U.S. Treasury, currently paying a composite rate of 4.03% for bonds issued from November 2025 through April 2026.1TreasuryDirect. I Bonds Interest Rates You buy them directly from the Treasury rather than through a bank or brokerage, you can hold them for up to 30 years, and the interest is exempt from state and local taxes. Because the federal government backs them, they carry virtually no default risk, which makes them a common choice for cash you want to protect from inflation.
How the Interest Rate Works
An I Bond earns a composite rate built from two pieces. The first is a fixed rate set by the Treasury on the day you buy, which stays locked for the life of your bond. The second is a semiannual inflation rate that the Treasury resets every six months based on changes in the Consumer Price Index for All Urban Consumers.1TreasuryDirect. I Bonds Interest Rates
The two pieces combine through this formula: composite rate = fixed rate + (2 × semiannual inflation rate) + (fixed rate × semiannual inflation rate). The current 4.03% composite comes from a 0.90% fixed rate paired with a 1.56% semiannual inflation rate.1TreasuryDirect. I Bonds Interest Rates
The Treasury announces new rates on the first business day of May and November each year.2TreasuryDirect. Fiscal Service Announces New Savings Bonds Rates, Series I to Earn 3.98%, Series EE to Earn 2.70% Your own bond’s rate resets every six months from its issue date, not on those announcement dates. A bond issued in March picks up the new inflation component each March and September. If inflation turns negative, the composite can drop, but the Treasury guarantees it will never fall below zero, so your bond’s redemption value cannot decrease.1TreasuryDirect. I Bonds Interest Rates
Interest accrues monthly and compounds semiannually. Every six months from your issue date, the accumulated interest folds into the principal, so the next six months of growth works off a larger base. This continues for 30 years or until you cash the bond.1TreasuryDirect. I Bonds Interest Rates
How Much You Can Buy Each Year
Each Social Security number (or Employer Identification Number) can buy up to $10,000 in electronic I Bonds per calendar year through TreasuryDirect.3TreasuryDirect. Savings Bonds How Much Can I Spend/Own? You can add up to $5,000 in paper I Bonds by directing part of your federal tax refund to them with IRS Form 8888. Paper bonds come in $50 increments.4TreasuryDirect. Questions and Answers About Series I Savings Bonds That brings the annual maximum to $15,000 per person.
A few wrinkles stretch or shrink that cap. Gift bonds count toward the recipient’s limit, not the giver’s: if someone sends you $4,000 in gift bonds, you can only buy $6,000 more in electronic I Bonds that year.5TreasuryDirect. FAQs About Undelivered Gift Bonds On the other side, holding both an individual account and an entity account under the same SSN lets you buy up to the $10,000 electronic limit in each, doubling your electronic capacity. A trust with its own EIN can buy another $10,000. A minor can own bonds through a parent-managed linked account inside the parent’s TreasuryDirect profile, with a separate $10,000 limit of their own.3TreasuryDirect. Savings Bonds How Much Can I Spend/Own?
To own I Bonds at all, you need a Social Security number and must be a U.S. citizen (whether living in the U.S. or abroad), a U.S. resident, or a civilian employee of the federal government regardless of where you’re posted.6TreasuryDirect. Buying Savings Bonds Corporations, partnerships, trusts, and estates can hold them too.
How to Buy I Bonds
Electronic I Bonds are sold only through TreasuryDirect.gov. You cannot buy them at a bank or brokerage. To open an account, you’ll need your Social Security number, a U.S. bank account (routing and account numbers), and an email address. The site walks you through picking an account type, setting security questions, and linking your bank.6TreasuryDirect. Buying Savings Bonds
Once the account is active, select BuyDirect from the main menu, choose Series I Savings Bonds, and enter the amount. The minimum electronic purchase is $25, and you can specify any amount down to the penny — a $36.73 purchase is perfectly valid.7TreasuryDirect. I Bonds After you confirm, the Treasury debits your linked bank account, and the bond appears in your portfolio with an issue date of the first day of the month you bought it.
If you want to give a bond, both you and the recipient need TreasuryDirect accounts. You’ll enter the recipient’s full name, Social Security number, and account number. The gift sits in your Gift Box for at least five business days while payment clears, after which you can deliver it. You can also keep it in the Gift Box and deliver it in a later calendar year, so the purchase hits the recipient’s limit for that future year instead of the year you bought it.8TreasuryDirect. Savings Bonds Giving Savings Bonds as Gifts
When You Can Cash Them In
You must hold an I Bond for at least 12 months before cashing it, with no exceptions. If you redeem between 12 months and five years, you forfeit the last three months of interest. After five years, that penalty disappears.7TreasuryDirect. I Bonds On a bond earning around 4%, giving up three months of interest costs you roughly 1% of the bond’s value, so an early redemption during years two through five is a modest hit rather than a serious loss.
For electronic bonds, log into TreasuryDirect, open ManageDirect, and click Redeem securities. You can cash as little as $25 at a time, and a partial redemption has to leave at least $25 in the bond. Paper bonds cannot be partially redeemed; you cash the whole bond at once, either at a bank that will handle them or by mail to the Treasury.9TreasuryDirect. Cash EE or I Savings Bonds
How I Bond Interest Is Taxed
I Bond interest is subject to federal income tax but exempt from all state and local income taxes.10TreasuryDirect. Tax Information for EE and I Bonds Most owners use the cash method and owe nothing until they redeem the bond or it reaches final maturity at 30 years. You can instead elect the accrual method and report interest each year as it’s earned; switching back to cash reporting later requires IRS Form 3115.11Internal Revenue Service. About Form 3115, Application for Change in Accounting Method
There’s a separate exclusion for higher education. If you use the proceeds for qualified college expenses, you may be able to exclude some or all of the interest from federal tax, but the bond must have been issued when the owner was at least 24 years old. Bonds registered in a child’s name do not qualify.12TreasuryDirect. Savings Bonds Using Bonds for Higher Education The exclusion phases out at higher incomes. For 2026, single filers begin losing it when modified adjusted gross income exceeds $101,800 and lose it entirely at $116,800; the joint-filer range is $152,650 to $182,650. Married filing separately cannot use the exclusion at all.
Naming a Beneficiary or Co-Owner
When you buy an I Bond, you register it one of three ways: sole owner, owner with a payable-on-death (POD) beneficiary, or with a co-owner. The choice decides what happens to the bond when someone dies, and it’s worth getting right at purchase.
A POD beneficiary has no rights to the bond while you’re alive. You can change or remove them at any time without their consent. When you die, the bond passes directly to that person outside probate, regardless of what your will says.13eCFR. Title 31 Section 363.20 If the beneficiary dies before you, the bond reverts to your estate.
A co-owner has equal rights from day one. Either co-owner can redeem the bond without the other’s permission. When one co-owner dies, the survivor becomes sole owner automatically; if both die at once, the bond splits equally between their estates.14eCFR. Title 31 Part 315 Subpart L – Deceased Owner, Coowner or Beneficiary The practical tradeoff is control during your lifetime: a co-owner can cash the bond out from under you, and a beneficiary cannot.