I Bond Calculator
Calculate Series I savings bond interest from fixed rate, inflation rate, and holding period. Enter values for instant results with step-by-step formulas.
Formula
Composite Rate = Fixed Rate + (2 x Semiannual Inflation Rate) + (Fixed Rate x Semiannual Inflation Rate)
The composite rate combines the fixed rate (set at purchase, lasts 30 years) with the semiannual inflation rate (updated every 6 months based on CPI). Interest compounds semiannually. A 3-month interest penalty applies if redeemed before 5 years.
Worked Examples
Example 1: Standard I Bond Purchase Held to Maturity
Problem: You purchase $10,000 in I Bonds with a 1.3% fixed rate and 2.96% current inflation rate. You hold for 5 years. Federal tax rate is 24%.
Solution: Composite rate = 1.3% + (2 x 1.48%) + (1.3% x 1.48%) = 4.28%\nMonthly rate = 4.28% / 12 = 0.357%\nValue after 5 years = $10,000 x (1.0428/2)^10 = $12,350\nTotal interest = $2,350\nNo early redemption penalty (held 5+ years)\nFederal tax on interest = $2,350 x 24% = $564\nAfter-tax return = $2,350 - $564 = $1,786\nNo state tax owed.
Result: Value: $12,350 | Interest: $2,350 | After-tax interest: $1,786
Example 2: Early Redemption with Penalty
Problem: You need to redeem your $10,000 I Bond after 18 months. Fixed rate is 1.3%, inflation rate is 2.96%.
Solution: Composite rate = 4.28%\nValue after 18 months = $10,000 x (1 + 0.0428/12)^18 = $10,656\nEarly redemption penalty = last 3 months interest\nPenalty = value - value/(1 + 0.0428/12)^3 = $10,656 - $10,543 = $113\nRedeemable value = $10,656 - $113 = $10,543\nEffective interest earned = $543 on $10,000 over 18 months\nAnnualized return after penalty = approximately 3.57%
Result: Gross value: $10,656 | Penalty: $113 | Redeemable: $10,543
Frequently Asked Questions
How is the I Bond composite interest rate calculated?
The composite rate uses a specific formula that combines the fixed rate and the semiannual inflation rate. The formula is: Composite Rate = [Fixed Rate + (2 x Semiannual Inflation Rate) + (Fixed Rate x Semiannual Inflation Rate)]. This means the fixed rate and inflation rate work together rather than being simply added. For example, with a 1.3% fixed rate and a 2.96% annualized inflation rate (1.48% semiannual), the composite rate equals 0.013 + (2 x 0.0148) + (0.013 x 0.0148) = 4.28%. The inflation component is updated every May and November based on CPI-U data, while the fixed rate is set at purchase and never changes.
How are I Bond interest earnings taxed?
I Bond interest is subject to federal income tax but exempt from state and local income taxes, giving them a tax advantage over many other fixed-income investments. You have two options for reporting interest: the cash method (default) where you report interest in the year you redeem or the bond matures, or the accrual method where you report interest annually. Most people choose the cash method to defer taxes. If used for qualified higher education expenses at eligible institutions, the interest may be completely tax-free if your income is below certain thresholds. This education exclusion applies to tuition and fees but not room and board.
Is my data stored or sent to a server?
No. All calculations run entirely in your browser using JavaScript. No data you enter is ever transmitted to any server or stored anywhere. Your inputs remain completely private.
How do I get the most accurate result?
Enter values as precisely as possible using the correct units for each field. Check that you have selected the right unit (e.g. kilograms vs pounds, meters vs feet) before calculating. Rounding inputs early can reduce output precision.
How accurate are the results from I Bond Calculator?
All calculations use established mathematical formulas and are performed with high-precision arithmetic. Results are accurate to the precision shown. For critical decisions in finance, medicine, or engineering, always verify results with a qualified professional.
Can I share or bookmark my calculation?
You can bookmark the calculator page in your browser. Many calculators also display a shareable result summary you can copy. The page URL stays the same so returning to it will bring you back to the same tool.