I Bond Calculator

A Series I savings bond earns a composite rate built from two parts that behave very differently. The fixed rate is set on the day of purchase and stays with that bond for its entire 30-year life. The inflation component is reset every May and November from the change in the CPI-U over the preceding six months, and it applies to every outstanding I Bond regardless of when it was bought. The two are combined multiplicatively, not by simple addition: composite = fixed + (2 x semiannual inflation) + (fixed x semiannual inflation). The cross term is small but real, and it is why a 1.30 percent fixed rate paired with 2.96 percent annualized inflation produces about 4.28 percent rather than 4.26 percent. Interest accrues monthly and compounds semiannually into principal, so the redemption value never falls even when the CPI reading is negative - the composite rate is floored at zero. The liquidity rules are as important as the yield. Nothing can be redeemed in the first 12 months under any circumstance, and redemption between 12 months and 5 years forfeits the most recent three months of interest, which is the penalty this model subtracts. Purchases are capped at 10,000 dollars per Social Security number per calendar year electronically, plus up to 5,000 dollars in paper bonds bought with a federal tax refund. Interest is exempt from state and local tax, federally taxable, and deferrable until redemption - and potentially excludable entirely if used for qualified higher education under the income limits.

The United States has sold retail savings bonds since the Series E war bond of 1941, which financed the Second World War through payroll deduction and was replaced by the Series EE bond in 1980. What none of those instruments offered was protection against inflation, a gap that became painfully visible to holders during the 1970s when double-digit price increases destroyed the real value of fixed-rate holdings. The Treasury addressed it in two steps. Treasury Inflation-Protected Securities were introduced for the marketable market in January 1997, and the Series I savings bond followed in September 1998 as the non-marketable equivalent for individual savers, using the composite fixed-plus-inflation structure still in force. Administration moved online with the launch of TreasuryDirect in 2002, and paper I Bonds were discontinued at the start of 2012 except for those bought with a tax refund. Purchase limits have swung sharply: the annual cap was cut from 30,000 dollars to 5,000 dollars per series in 2008, then set at 10,000 dollars for electronic bonds in 2012. The instrument drew mass attention in May 2022, when the inflation reset produced a composite rate of 9.62 percent and demand overwhelmed the TreasuryDirect account-opening system.