Series I Savings Bonds, commonly known as I Bonds, are U.S. government-backed savings bonds designed to help preserve purchasing power during periods of inflation. For bonds issued between May 1, 2026, and Oct. 31, 2026, the composite rate is 4.26%, including a fixed rate of 0.90%. The composite rate consists of a fixed rate that remains unchanged for the life of the bond and an inflation-adjusted component that is reset every six months.
The fixed rate is significant because it remains attached to the bond for as long as it earns interest. While current I Bonds carry a 0.90% fixed rate, some of the earliest I Bonds issued when the program launched in 1998 locked in fixed rates of 3.40% above inflation. Investors who purchased those bonds received decades of inflation protection plus a substantial real return, making them among the most attractive I Bonds ever issued.
I Bonds earn interest monthly and compound semiannually. Investors may purchase up to $10,000 in electronic I Bonds per calendar year through TreasuryDirect, with purchases starting at just $25. While the bonds can be redeemed after 12 months, investors who cash out before five years lose the most recent three months of interest. Interest earned on I Bonds is exempt from state and local income taxes, and the bonds can continue earning interest for up to 30 years.
A $10,000 investment in the original 1998 I Bond may have grown to roughly $35,000 today, while the same amount invested in the S&P 500 could be worth more than $80,000—but only one of those investments guaranteed inflation protection, never lost principal, and allowed its owner to sleep soundly through every major market crash of the past three decades.
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