Series I savings bonds (I-bonds) are US government bonds that pay interest tied to inflation. They’re one of the few investments guaranteed to keep pace with inflation and can never lose their principal value. In 2026, you can buy up to $10,000 in electronic I-bonds per year through TreasuryDirect.gov, with the option to purchase an additional $5,000 using a tax refund.
Key takeaway: I-bonds protect against inflation with zero default risk. The main limitations are the $10,000 annual purchase limit per person and the 12-month lockup period before you can redeem. They’re best used for money you won’t need for at least a year.
Current I-Bond Rate (2026)
I-bond rates are set by the US Treasury and announced every May 1 and November 1. The composite rate has two parts:
| Component | Description |
|---|---|
| Fixed rate | Set at time of purchase; stays for the life of the bond |
| Inflation rate | Based on CPI-U (Consumer Price Index); resets every 6 months |
| Composite rate | Fixed rate + (2 × semiannual inflation rate) + (fixed × semiannual inflation) |
Check the current rate: TreasuryDirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/ — updated each May and November.
Rate history context:
- May 2022: 9.62% (peak inflation era)
- November 2022: 6.89%
- May 2023: 4.30%
- November 2023: 5.27%
- Rates have moderated as inflation has declined
I-Bond Annual Purchase Limits
| Purchase Method | Annual Limit Per Person |
|---|---|
| Electronic (TreasuryDirect) | $10,000 |
| Paper (tax refund via Form 8888) | $5,000 |
| Maximum per person | $15,000 |
Separate entity limits: Trusts, businesses, and estates can each purchase up to $10,000 separately — a strategy used by some investors to increase exposure.
How to Buy I-Bonds Step by Step
Step 1: Create a TreasuryDirect Account
- Go to TreasuryDirect.gov
- Click “Open an Account” → “TreasuryDirect”
- Provide your SSN, email, bank account information, and address
- Complete identity verification (may require answering security questions or providing a driver’s license)
- Receive your account number by email
Note: TreasuryDirect is a government website — it has a dated interface and can be slow. The account creation process can take days if manual review is required.
Step 2: Log In and Navigate to I-Bonds
- Log in with your account number and password
- Click “BuyDirect” from the top menu
- Select “Series I” under Savings Bonds
- Click “Submit”
Step 3: Choose Purchase Amount and Date
- Minimum purchase: $25
- Maximum per transaction: Up to your annual remaining limit
- Choose a purchase date (or leave at current date)
- Select your bank account for funding
Step 4: Confirm and Complete
- Review your order and confirm
- Funds are withdrawn from your linked bank account
- I-bonds are credited to your TreasuryDirect account within 1 business day
I-Bond Holding Rules
| Rule | Detail |
|---|---|
| Minimum hold | 12 months — cannot redeem before 1 year |
| Early redemption penalty | Forfeit last 3 months of interest (if held < 5 years) |
| No penalty after | 5 years from purchase |
| Maximum term | 30 years (then stops earning interest) |
Interest accrual: I-bonds earn interest monthly, compounding semi-annually. Interest is added to the bond’s value — you don’t receive cash payments until you redeem.
Tax Treatment of I-Bonds
| Tax | Treatment |
|---|---|
| Federal income tax | Deferred until redemption (or bond matures/is sold) |
| State income tax | Exempt — I-bonds are exempt from state and local income tax |
| Estate tax | Subject to federal estate tax |
| Education exclusion | Interest may be tax-free if used for qualified higher education expenses |
The education exclusion: If you redeem I-bonds to pay for qualified college tuition and fees (not room and board), the interest may be excluded from federal income. Income limits apply (phases out at higher incomes). See IRS Publication 970.
Deferred taxation advantage: The longer you hold, the more you benefit from deferring taxes on accumulated interest. Many holders redeem in a low-income year (retirement) to minimise the tax hit.
I-Bonds vs. High-Yield Savings and CDs
| I-Bonds | HYSA | 1-Year CD | |
|---|---|---|---|
| Rate type | Inflation-adjusted | Variable | Fixed |
| Minimum hold | 12 months | None | Varies |
| Early penalty | 3 months interest | None | Varies |
| Annual purchase limit | $10,000 | None | None |
| FDIC/backed by | US Treasury | FDIC (up to $250K) | FDIC |
| State tax | Exempt | Taxable | Taxable |
When I-bonds win: During periods of high inflation, I-bonds outperform fixed CDs and usually outperform HYSA rates. When inflation is low, CDs and HYSAs may offer better rates with more flexibility.
Gifting I-Bonds
You can purchase I-bonds as gifts for others:
- Must know recipient’s SSN and TreasuryDirect account
- Gifts count toward the recipient’s $10,000 annual limit (not yours — until delivered)
- Paper I-bonds can be purchased as gifts at financial institutions (check for availability)
Redeeming I-Bonds
To redeem electronic I-bonds:
- Log into TreasuryDirect.gov
- Navigate to your I-bond holding
- Click “Redeem”
- Choose amount and destination bank account
- Funds typically arrive within 1 business day
Partial redemptions: You can redeem a portion of a bond (minimum $25 in $25 increments).
Related Resources
- CD Guide 2026 — all savings and fixed income options
- I-Bonds vs Treasury Bonds — which is right for your situation
- HYSA vs Treasury Bills — short-term savings comparison
- Bonds vs CDs — savings vehicles compared
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy