I-Bond Calculator 2026: Current Rate, Purchase Limits, and When to Redeem

Series I Savings Bonds (I-Bonds) are US government bonds with yields that adjust for inflation every 6 months. They cannot lose value, are guaranteed by the federal government, and interest is state-tax-free.

The trade-off: you can only buy $10,000 per person per year, and the money is locked up for one year (with a 3-month interest penalty if redeemed before 5 years).

How I-Bond Interest Rates Work

The I-Bond rate has two components:

Component	2026 Value	What It Does
Fixed rate	1.20%	Permanent for the life of the bond
Inflation rate	1.66% (semi-annual) = 3.34% annualized	Changes every May and November based on CPI
Composite rate	~2.86% (current period)	Total rate earned, recalculated every 6 months

The composite formula: = Fixed Rate + (2 × Inflation Rate) + (Fixed Rate × Inflation Rate)

When inflation is high (as in 2021-2022 when I-Bonds paid 9.62%), I-Bonds outperform nearly all savings alternatives. When inflation is low, the yield may trail HYSAs and CDs.

I-Bond Purchase Limits (2026)

Method	Annual Limit
TreasuryDirect (per person)	$10,000
Paper bonds via tax refund	$5,000
Maximum per individual	$15,000
Married couple (joint)	$30,000
Trust or LLC	$10,000 additional

You cannot buy I-Bonds through a broker. Only TreasuryDirect.gov for electronic purchases, and via IRS Form 8888 for paper bonds using your tax refund.

I-Bond Timeline: Locking Up and Getting Out

Holding Period	Rules
0-11 months	Cannot redeem at all
12-59 months	Can redeem, but lose last 3 months of interest (penalty)
60+ months (5 years)	Redeem anytime, no penalty
30 years	Bond stops earning interest (maximum hold)

The 3-month penalty calculated:

$10,000 I-Bond, composite rate 2.86%, redeemed at month 24:

Earned: 24 months × (2.86% / 12) = $476.60
Penalty: 3 months × (2.86% / 12) = $71.50
Net received: $405.10 in interest + $10,000 principal

At 60+ months, no penalty applies.

I-Bond Tax Treatment

Tax	Treatment
Federal income tax	Owed when redeemed (you choose when)
State/local income tax	Exempt
Capital gains	Not applicable
Estate/inheritance	Subject to federal estate tax

The tax deferral is valuable. You control when you owe federal income tax. You can redeem in a low-income year (gap year, early retirement) to minimize the tax hit. No federal tax until redemption.

Education tax exclusion: If you redeem I-Bonds and use the proceeds for qualified higher education expenses in the same year, the interest may be entirely federal-tax-free. Income limits apply (phased out above ~$113,000 single / $168,000 married in 2026).

I-Bond vs. HYSA vs. Treasury Bills (2026 Comparison)

Option	Current Rate	Tax	Liquidity	Risk
I-Bond	2.86%	Federal deferred, no state	Locked 1 year	None
HYSA	4.50-5.00%	Fully taxable annually	Instant	None (FDIC)
1-year Treasury	4.60%	State-exempt, federal taxable	Annual maturity	None
5-year CD	4.20%	Fully taxable	Penalty before 5 yr	None (FDIC)

In the current rate environment (2026), HYSAs and Treasuries offer higher nominal yields than I-Bonds. I-Bonds shine when inflation spikes above the HYSA/Treasury yield. As happened in 2021-2022. Their role in a portfolio is inflation insurance, not maximizing current yield.

When I-Bonds Make Sense

Strong case:

Inflation is rising or expected to rise above current HYSA rates
You have maxed tax-advantaged accounts and want a risk-free savings vehicle
You want state-tax-free interest (states with income tax benefit more)
You have a 5+ year time horizon for idle savings

Weak case:

You need liquidity in the next 12 months
Current inflation-adjusted yield is below HYSA or CD rates
You need to save more than $10,000-$15,000 per year

Frequently Asked Questions

Can I buy I-Bonds as a gift for someone else?

Yes. You can purchase I-Bonds as gifts and hold them in a gift box within TreasuryDirect until delivered. The gift counts against the recipient's $10,000 annual limit, not yours. This allows a couple to effectively double their annual I-Bond purchase by pre-buying the following year's allocation as gifts.

What is the best month to buy I-Bonds?

The rate resets every May 1 and November 1. To maximize your first year's return, buy in April (locking in the current rate for 6 months) or October (same logic). Buying the day before a rate reset allows you to benefit from a higher rate if inflation is declining. Track the CPI announcement in April and October to anticipate the next rate change.

How do I redeem I-Bonds?

Log in to TreasuryDirect.gov, select the bond, and request redemption. Proceeds are deposited directly to your bank account within one business day. The accrued interest shows up on a 1099-INT for the redemption year.

Featured Partner

FIDELITY