I Bonds

I bonds or series I bonds are U.S. Treasury Inflation Indexed US savings bonds. Series I Savings Bonds or I bonds for short are designed to protect investors from the effects of inflation. This section of US savings bonds information website covers i bonds or series i US savings bonds.

U.S. Treasury Inflation Indexed Savings Bonds (Series I Savings Bonds or I Bonds for short)

What are i bonds, i savings bond, or Series i US savings bonds?

A Series i US savings bond, or i bonds or i savings bond for short, is a U.S. Treasury Inflation Indexed Savings Bonds. Series i Savings Bonds or i bonds for short are U.S. Treasury securities issued by the U.S. Government and are designed to protect investors from the effects of inflation.

Series i US Savings Bonds (i bonds) were the US savings bonds introduced in 1998, and are intended for investors seeking to protect the purchasing power of their capital while earning a guaranteed real interest rate of return.

Interest on Series I Bonds

Interest on Series I bonds accrues monthly and is paid when the Series I savings bond is redeemed, in which year the total interest earned on the savings bond is included in the investor’s taxable income.

The interest rate on Series I bonds includes:

(i) a fixed rate of return, which is announced by the Treasury Department each May and November and remains the same throughout the life of any Series I Savings Bond purchased during that six month period; and

(ii) a variable semiannual inflation rate, which is also announced each May and November and which is based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers(CPI-U).

The semiannual inflation rate is combined with the fixed rate of the Series I Savings Bond to determine the bond’ s total interest payment for each six month period; interest is compounded semiannually.

In physical form Series I Savings Bonds are sold at face value in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. In electronic form, the Series I bonds are available in the same denominations.

Series I Savings Bonds can earn interest for up to 30 years (depending on the investor’s decision as to when to redeem the Series I bonds), and investors are limited to purchasing up to $30,000 principal amount of Series I Bonds per calendar year per person.

Series I Savings Bonds must be held for a minimum of one year; bonds redeemed within the first five years from the date of purchase incur a three month interest penalty.

The interest on Series I savings bonds is exempt from state and local income taxes.