I-Bond / Series I Savings Bond Return Calculator
Calculate the return on a Series I savings bond based on the fixed rate and inflation rate components.
Estimate growth over your holding period.
What an I-Bond actually is
A Series I savings bond is a US Treasury security designed specifically to protect savings from inflation. The interest rate has two parts that combine:
- Fixed rate — set when you buy the bond, stays constant for its 30-year life
- Inflation rate — adjusts every 6 months based on the CPI-U (Consumer Price Index for All Urban Consumers)
Both rates are announced by the Treasury every May 1 and November 1. The fixed rate applies to bonds purchased during the following 6-month window; the inflation rate applies to all I-Bonds outstanding.
The composite rate formula
composite rate = fixed rate + (2 × inflation rate) + (fixed rate × inflation rate)
The “×2” on inflation reflects that the announced inflation rate is for 6 months; doubling annualizes it. The interaction term (fixed × inflation) prevents understating the compounding.
Example: November 2024 had a fixed rate of 1.30% and an inflation rate of 1.55% (semiannual). composite = 0.013 + (2 × 0.0155) + (0.013 × 0.0155) = 0.013 + 0.031 + 0.0002 = 4.42% annualized
Why the fixed-rate component matters more than people realize
The fixed rate is what makes one I-Bond “vintage” different from another. Two I-Bonds with the same composite rate today may behave wildly differently long-term:
| Purchase period | Fixed rate (at purchase) |
|---|---|
| 1998-2001 | 3.0% to 3.6% (huge windfall in inflation) |
| 2001-2005 | 1.0% to 1.6% |
| 2005-2008 | 1.0% to 1.4% |
| 2008-2010 | 0.0% to 0.7% |
| 2010-2022 | 0.0% (zero) |
| Nov 2022 | 0.4% |
| May 2023 | 0.9% |
| Nov 2023 | 1.3% |
| May 2024 | 1.3% |
| Nov 2024 | 1.30% |
Anyone holding I-Bonds bought in 1999 at 3.4% fixed is enjoying composite rates well above current new-purchase composites. The fixed rate effectively lasts the life of the bond.
The famous 2022 I-Bond craze
In May-October 2022, US inflation hit 40-year highs and I-Bond composite rates reached 9.62% annualized. The story went viral and I-Bond purchases hit historic highs. Many of those buyers later realised the 9.62% was only for 6 months — once inflation moderated in 2023-2024, those same bonds dropped to 3-4% composite rates. The fixed rate (0% for most of the 2022 purchases) means those bonds will track inflation only, which is fine but not the windfall it appeared to be.
The rules everyone should know before buying
| Rule | Details |
|---|---|
| Minimum hold | 12 months (no early redemption, period) |
| Penalty (years 1-5) | Forfeit 3 months of interest if redeemed |
| Maturity | Earns interest for 30 years, then stops |
| Purchase limit | $10,000/year per person via TreasuryDirect |
| Bonus paper bonds | $5,000/year via tax refund (Form 8888) |
| Account location | TreasuryDirect.gov only (no brokerages) |
| Compounding | Semi-annually |
| Tax treatment | Federal taxable, state/local tax-FREE |
| Education exclusion | Tax-free if used for qualified education (income limits apply) |
The TreasuryDirect interface is famously bad
TreasuryDirect.gov runs on a website that looks frozen in 2003. The 30-character password requirement, the security image, the inability to use copy-paste — all real. Setup takes 30 minutes; transactions involve more friction than any modern banking app. Plan for this.
Recovery procedures (if locked out) involve a notarized form mailed to Minneapolis. Don’t let the password drift.
I-Bonds vs alternatives
| Vehicle | Pros | Cons |
|---|---|---|
| I-Bonds | Inflation protection, US Treasury safety, state-tax-free | Illiquid 12 months, $10k limit, friction |
| TIPS (Treasury Inflation-Protected Securities) | Liquid, no purchase limit, broker access | Pay state tax on phantom income, more complex |
| HYSA | Fully liquid, easy access | Loses to inflation when rates lag |
| Series EE Bonds | Doubles in 20 years guaranteed | Lower return; less attractive than I-Bonds |
| Treasury bills | Liquid, state-tax-free, no purchase limit | No inflation protection; fixed rate |
| Stock market | Long-run inflation beating | Volatility, no guarantee |
I-Bonds are best for the slice of long-term savings you want guaranteed not to lose to inflation. They’re not a primary investment vehicle — at $10k/year/person, they can’t grow large enough to matter for serious wealth-building. They’re a sleep-easy hedge.
The “I-Bond ladder” strategy
Some savers buy $10k of I-Bonds every year, building a ladder over time:
| Years in | Total invested | Total balance (after inflation compounding) |
|---|---|---|
| Year 5 | $50,000 | $60k to $80k depending on inflation |
| Year 10 | $100,000 | $130k to $200k |
| Year 20 | $200,000 | $300k to $600k+ |
| Year 30 | $300,000 | varies hugely |
After year 5 with each purchase, you have continuous access to maturing 12-month bonds, so the ladder becomes fully liquid in effect. For someone building a long-term inflation-protected cash reserve, this is a strong default strategy.
Taxes — the under-appreciated wrinkle
I-Bond interest is federal taxable (when you redeem, not as it accrues) but state and local tax-free. In California, that’s a 13.3% saving against the same interest in a CD or HYSA. The federal tax is deferred — you can either report annually or pay all at redemption.
The education exclusion is a meaningful bonus: if I-Bonds are redeemed in a year you (or a dependent) pay qualified higher-education expenses, the interest can be completely tax-free federally — provided you’re under income limits ($102,810 single / $161,600 married for 2024, phased out). Limited but valuable for some families.
When I-Bonds make sense
- Emergency fund tier 2 (after 3-6 months in HYSA)
- Long-term inflation hedge on a portion of cash savings
- Education savings for a young child (5+ year horizon)
- Cash holdings in high state-tax states
- Retirement-bridge cash for someone retiring in 5-10 years
When they don’t
- Money you might need in under 12 months
- Investors trying to grow significant wealth (the $10k cap is limiting)
- Someone who finds the TreasuryDirect friction prohibitive
- Periods of very low inflation when other safe assets pay more
- People who can’t tolerate guaranteed real return of 0% (when fixed rate is 0% and inflation drops)
Bottom line
I-Bonds are an excellent but limited tool. Treat them as the “boring, guaranteed inflation protection” slice of long-term savings. Buy $10k/year if it fits your overall plan; don’t put your emergency fund or short-term savings in them. The TreasuryDirect interface is the worst part of the experience; everything after is genuinely solid.