I-Bond Calculator 2026: Current Rate, Purchase Limits, and Returns

Series I savings bonds (I-Bonds) are US Treasury securities whose interest rate adjusts every 6 months based on inflation. When inflation runs hot, I-Bonds pay well above what you would earn at a bank. When inflation is low, they may underperform high-yield savings accounts.

The key appeal: zero risk of loss, guaranteed inflation protection, and state income tax exemption.

How I-Bond Interest Rates Work

The I-Bond rate has two components:

1. Fixed rate: Set at purchase and stays with the bond forever. Currently 1.2% (November 2025-April 2026 period).
2. Inflation rate: Changes every May and November based on CPI-U. It is applied semi-annually.

The composite rate formula: Fixed Rate + 2 x Inflation Rate + (Fixed Rate x Inflation Rate)

With a 1.2% fixed rate and 1.48% semi-annual inflation rate:

• Composite = 0.012 + (2 x 0.0148) + (0.012 x 0.0148) = approximately 4.14%

Rates change every May 1 and November 1. Check TreasuryDirect.gov for current rates.

2026 I-Bond Purchase Limits

| Buyer | Annual Limit | |-------|-------------| | Individual (electronic) | $10,000 | | Individual (paper, tax refund) | $5,000 | | Married couple | $20,000 (electronic) | | Trust, business | $10,000 per entity |

The $10,000 limit is per Social Security number. A couple can buy $20,000 per year. Each of your minor children is also a separate entity — $10,000 per child.

Using your federal tax refund, you can purchase up to $5,000 more in paper I-Bonds annually (Form 8888).

The Rules Around Redemption

Year 1: Cannot redeem at all. The bond is locked up completely.

Years 1-5: Can redeem but lose the last 3 months of interest as a penalty.

Year 5+: Can redeem freely at any time, keeping all interest.

The penalty effectively means I-Bonds work best as a 1-3+ year holding. If you redeem at exactly year 1, you lose 3 months of interest, reducing your effective annual yield.

Example: $10,000 I-Bond at 4% composite rate, redeemed after 12 months:

• Earned: 12 months x (4%/12) x $10,000 = $400
• Penalty: 3 months x (4%/12) x $10,000 = $100
• Net received: $10,300 (3% effective return for 12 months)

Hold to 15 months and you keep the full 12 months of interest. The 3-month penalty stops mattering after 5 years.

The Tax Advantages

• Federal income tax: Due at redemption or maturity (you choose when to recognize the income)
• State income tax: Exempt
• Federal estate tax: Subject to estate tax like other assets

For someone in a 5% state income tax bracket, the state exemption is worth 0.20% annually at a 4% yield. Small but real.

The ability to defer federal taxes until redemption is also useful. If you plan to redeem during a low-income year (retirement, gap year), the deferred interest will be taxed at a lower rate.

When I-Bonds Beat Other Options

| Scenario | I-Bonds Look Good | |----------|-------------------| | High inflation environment | Yes — rate adjusts upward with CPI | | Stable 3-5 year holding period | Yes — competes well with CDs | | High state income tax | Yes — state exemption adds value | | Emergency fund (secondary) | No — 1-year lockup | | Short-term savings (under 1 year) | No — locked up |

In low-inflation environments, I-Bonds may pay less than high-yield savings accounts or short-term Treasuries. The appeal is the guaranteed inflation protection.

See Best Savings Accounts for comparison of current HYSA rates vs I-Bond rates.

Use the CalcMoney Inflation Calculator to understand what inflation protection is worth over your holding period.

Frequently Asked Questions

Can I buy I-Bonds as a gift?

Yes. You can purchase I-Bonds as gifts through TreasuryDirect, but the recipient must have a TreasuryDirect account to receive them. Gifts count against the recipient's annual limit, not yours.

What happens to I-Bonds after 30 years?

I-Bonds stop earning interest after 30 years. You must redeem them at that point. Most long-term holders redeem long before 30 years for this reason.

Are TIPS a better inflation hedge than I-Bonds?

Treasury Inflation-Protected Securities (TIPS) are also inflation-indexed but trade on the open market. They can lose market value if real interest rates rise, even when inflation is high. I-Bonds cannot decline in value — the worst case is earning 0% in a period of falling prices (deflation). For retail investors wanting simple, guaranteed inflation protection, I-Bonds are generally simpler and more predictable than TIPS.