description US Treasury Series I Bonds Overview
US Treasury Series I Bonds are a unique savings bond designed to protect against inflation. Their interest rate is a combination of a fixed rate and an inflation rate, which adjusts every six months. I Bonds are purchased directly from the TreasuryDirect website and have a low initial investment amount. They are extremely safe and suitable for retirees or those seeking a safe haven for their savings, but have purchase limits.
info US Treasury Series I Bonds Specifications
| Tax Federal | Deferred until redemption |
| Issue Format | Electronic only (since 2012) |
| Maturity Period | 30 years |
| Rate Adjustment | Every 6 months (May and November) |
| Tax State Local | Exempt |
| Minimum Purchase | $25 |
| Inflation Measure | Consumer Price Index (CPI-U) |
| Purchase Platform | TreasuryDirect.gov |
| Government Guarantee | Full faith and credit of US government |
| Interest Compounding | Semiannual |
| Maximum Annual Purchase | $10,000 per Social Security Number |
| Redemption Availability | After 12-month holding period |
| Early Withdrawal Penalty | Forfeits last 3 months of interest if redeemed before 5 years |
balance US Treasury Series I Bonds Pros & Cons
- Inflation protection with composite rate that adjusts every 6 months based on CPI, protecting purchasing power
- Backed by the full faith and credit of the US government with zero default risk
- Tax advantages including deferred federal taxes and complete exemption from state and local taxes
- Low minimum investment requirement of $25 makes it accessible for all investors
- No market volatility or risk of principal loss, providing stable guaranteed returns
- Interest compounds semi-annually, allowing for compound growth over time
- Limited liquidity with 12-month holding period before redemption and penalty for early withdrawal before 5 years
- Annual purchase caps of $10,000 per Social Security Number restrict investment flexibility
- No secondary market exists; cannot sell bonds to other investors before maturity
- Fixed rate component can be very low during periods of minimal inflation
- Interest rate can decrease if deflation occurs, potentially yielding below expectations
help US Treasury Series I Bonds FAQ
What is the current interest rate on Series I Bonds and how is it calculated?
Series I Bond rates consist of a fixed rate (set at purchase) plus an inflation rate that adjusts twice yearly in May and November. The current composite rate is calculated by combining the fixed rate with the semiannual inflation rate multiplied by two, protecting against both inflation and deflation.
Can I purchase Series I Bonds for my children or as gifts?
Yes, you can purchase I Bonds for minors using a custodial account (UGMA/UTMA) or as gifts. You can buy up to $10,000 per year per Social Security Number, including purchases made as gifts by providing the recipient's SSN at TreasuryDirect.
What happens if I need to cash in my I Bond before 5 years?
If you redeem I Bonds before holding them for 5 years, you forfeit the last 3 months of interest as an early withdrawal penalty. After 5 years, no penalty applies. You can redeem after 12 months, but the 3-month penalty makes early redemption costly.
How do I buy Series I Bonds and what payment methods are accepted?
I Bonds must be purchased electronically through TreasuryDirect.gov. Accepted payment methods include direct debit from a bank account, electronic funds transfer, or using your federal income tax refund to purchase bonds (Form PD 8888). Paper bonds were discontinued in 2012.
Are Series I Bond interest payments taxable?
Interest is subject to federal income tax but exempt from state and local taxes. You can report interest annually (most common) or defer it until bond redemption, maturity, or death. Educational users may qualify for tax exclusions if income thresholds are met.
What is US Treasury Series I Bonds?
How good is US Treasury Series I Bonds?
How much does US Treasury Series I Bonds cost?
What are the best alternatives to US Treasury Series I Bonds?
What is US Treasury Series I Bonds best for?
Risk-averse investors seeking a safe, government-backed savings vehicle that protects principal from inflation erosion over medium to long-term holding periods.
How does US Treasury Series I Bonds compare to Schwab U.S. Treasury ETF (SCHR)?
Is US Treasury Series I Bonds worth it in 2026?
What are the key specifications of US Treasury Series I Bonds?
- Tax Federal: Deferred until redemption
- Issue Format: Electronic only (since 2012)
- Maturity Period: 30 years
- Rate Adjustment: Every 6 months (May and November)
- Tax State Local: Exempt
- Minimum Purchase: $25
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