What Are I Bonds? Rates, Limits, and How to Buy Them

Last updated 06/08/2026 by

Ante Mazalin

Edited by

Andrew Latham

Fact checked by

Andy Lee

Summary:

I bonds are U.S. Treasury savings bonds whose interest rate combines a fixed rate with an inflation rate that adjusts twice a year. They are designed to protect savings from losing value to inflation while carrying the full backing of the federal government.

Backed by: The U.S. Treasury, making them one of the lowest-risk investments available.
Rate structure: A fixed rate locked for the life of the bond plus a changing inflation rate.
Best for: Long-term savers who want inflation protection over speculative growth.
Bought through: TreasuryDirect, the government’s online platform.

When prices climb, money sitting in a low-rate account quietly loses buying power. I bonds were built for exactly that problem, pairing a guaranteed floor with a rate that rises when inflation does.

How I bonds work

An I bond earns interest through a composite rate that blends two parts: a fixed rate and an inflation rate. The fixed rate stays the same for the bond’s entire 30-year life, while the inflation rate resets every six months based on the Consumer Price Index.

The Treasury announces new rates each May 1 and November 1. For bonds issued from May 2026 through October 2026, the U.S. Treasury set a composite rate of 4.26%, combining a 0.90% fixed rate with a 3.34% annualized inflation rate.

Interest accrues monthly and compounds semiannually, and you owe no tax on it until you cash the bond.

Purchase limits and rules

I bonds come with specific limits and holding rules that shape how they fit into a savings plan. They reward patience and penalize early access.

Minimum purchase: $25 for electronic bonds.
Annual limit: $10,000 per person in electronic bonds each year, with an additional $5,000 in paper bonds available through a federal tax refund.
Minimum hold: You cannot cash an I bond within the first 12 months.
Early withdrawal penalty: Cashing before five years forfeits the last three months of interest.
Maximum term: Bonds stop earning interest after 30 years.

Pro Tip

The fixed-rate portion is what makes one I bond better than another over the long run, because it never changes. When the fixed rate is above zero, locking it in protects your real return even after inflation cools, so the issue date you choose matters more than it first appears.

I bonds and inflation

The inflation component is what sets I bonds apart from most other savings products. As measured by the Consumer Price Index, rising prices push the bond’s rate up, which preserves your purchasing power.

This link cuts both ways. When inflation falls, the variable rate drops too, and in periods of very low inflation the composite rate can sink close to the fixed rate alone.

The protection I bonds offer becomes most visible during high-inflation stretches, the same periods that erode cash sitting in standard accounts, a dynamic SuperMoney’s inflation study tracks across the broader economy.

I bonds vs. other low-risk savings

I bonds compete with other safe places to park money, but each has a different trade-off between access and return.

Option	Rate behavior	Access to funds
I bond	Fixed rate plus inflation, resets twice a year	Locked 12 months; penalty before 5 years
High-yield savings account	Variable, set by the bank	Fully liquid anytime
Certificate of deposit	Fixed for the full term	Penalty for early withdrawal

I bonds shine for money you won’t need for at least a year and want shielded from inflation, while a savings account wins when you need instant access.

How to buy I bonds

Open a TreasuryDirect account: Register at TreasuryDirect.gov with your Social Security number and bank details.
Link your bank: Connect the account you’ll use to fund purchases.
Choose the amount: Buy anywhere from $25 up to the $10,000 annual electronic limit.
Confirm the issue date: Buy before month-end to earn that month’s interest from the first.
Hold and track: Watch rate announcements each May and November to plan future purchases.

Paper I bonds are only available by directing part of your federal tax refund to the purchase, which adds up to $5,000 on top of the electronic limit.

Frequently asked questions

What is the current I bond rate?

For bonds issued from May 2026 through October 2026, the composite rate is 4.26%, made up of a 0.90% fixed rate and a 3.34% inflation rate. Rates reset every May 1 and November 1.

How much can I buy in I bonds per year?

You can buy up to $10,000 in electronic I bonds per person each year through TreasuryDirect. You can add up to $5,000 in paper bonds using your federal tax refund.

Can I lose money on I bonds?

No. I bonds are backed by the U.S. Treasury and never lose principal. In low-inflation periods the rate can fall, but the value of your bond does not drop.

When can I cash an I bond?

You must hold an I bond for at least 12 months. If you cash it before five years, you forfeit the most recent three months of interest.

Are I bonds taxed?

I bond interest is exempt from state and local tax and federal tax is deferred until you cash the bond or it matures. Interest used for qualified education expenses may be federally tax-free for eligible filers.

Key takeaways

I bonds earn a composite rate combining a fixed rate locked for 30 years and an inflation rate that resets twice a year.
The May 2026 composite rate is 4.26%, with a 0.90% fixed rate and 3.34% inflation rate.
You can buy $10,000 per person electronically each year, plus $5,000 in paper bonds via a tax refund.
Bonds must be held 12 months, with a three-month interest penalty before five years.
They are backed by the U.S. Treasury and cannot lose principal.

I bonds are one piece of a low-risk portfolio, and pairing them with the right account keeps the rest of your savings working. You can compare investment and brokerage accounts to build out the rest of your strategy.

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