What Are I-Bonds? Inflation Made Them Popular. What Now?

Savings bonds in different denominations stacked on top of each other.

(Image credit: Getty)

Series I savings bonds have drawn a lot of attention in the last few years as inflation flew. In 2022, billions of dollars of I-bonds were sold when their interest rate ran up to 9.62%.

As inflation has slowed, so have returns on I-bonds. The current rate on I-bonds is 3.98%, putting it under some of the best high-yield savings accounts, but I-bonds are still seen as attractive investments for certain situations.

Here, we’ve compiled answers to frequently asked questions about I-bonds.

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How is the interest rate for I-bonds determined?

The composite rate has two parts: A fixed rate, which remains the same for the life of the bond, and an inflation rate, based on the consumer price index.

Each May 1 and November 1, the U.S. Treasury Department announces a new fixed rate and inflation rate that apply to bonds issued during the following six months. The inflation rate changes every six months from the bond’s issue date.

The fixed rate for I-bonds issued from May 1, 2025 through October 31, 2025, is 1.10% — and that will never change for as long as you hold the bond (I-bonds mature after 30 years).

How does interest accrue on I-bonds?

The bond earns interest monthly from the first day of the month of the issue date, and interest is compounded semiannually. Interest is added to the bond’s principal value.

You can’t redeem an I-bond in the first year, and if you cash it in before five years have passed, you forfeit the most recent three months of interest. If you check your bond’s value at TreasuryDirect.gov within the first five years of owning it, the amount you’ll see will have the three-month penalty subtracted from it.

When you buy a new bond, interest doesn't show until the first day of the fourth month following the issue month. If your bond has a July 2025 issue date, for example, interest is first posted in November 2025.

How much in I-bonds can I buy?

An individual can buy up to $10,000 per calendar year in electronic bonds through TreasuryDirect.gov.

As of January 1, 2025, buying paper I-bonds with your income tax refund is no longer possible. Tax filers will still be able to buy I-bonds online.

That’s just for the individual, though. A range of other entities can purchase I-bonds, including:

Corporation
Limited liability company (LLC)
Sole proprietorship
Partnership
Professional limited liability company (PLLC)
Deceased estate
Living estate (court-appointed legal guardian of the estate of another living person)
Trust

Can I buy I-bonds for my kids?

Yes. A parent or guardian can set up a custodial TreasuryDirect account for a child younger than 18.

You can purchase I-bonds for your child within the minor account, which you must link to your own TreasuryDirect account.

Other people can send I-bonds as gifts to your child’s account, but you'll have to supply your child’s Social Security number and TreasuryDirect account number to the giver.

As with an adult, the purchase limit for a child — including gifts received — is $10,000 per calendar year for electronic I-bonds.

How are I-bonds taxed?

I-bond interest is free of state and local income tax, and you can defer federal tax until you file a tax return for the year you cash in the bond or it stops earning interest because it has reached final maturity (after 30 years), whichever comes first.

You can also report the interest every year, which might be a smart choice if you’d rather avoid one large tax bill down the road.

If you use I-bond proceeds to pay for certain higher-education expenses for yourself, your spouse or your dependents, you might avoid federal tax. You must meet several requirements to be eligible.

Among them, the bond owner must have been at least age 24 by the issue date and have income that falls below specified limits. See more detail in Taxes on I-Bonds in Nine Common Situations.

How do I navigate TreasuryDirect?

TreasuryDirect has been widely criticized for its unwieldy format for years.

Although the home page was updated last year, when it comes to using the tools to buy bonds or otherwise interact, it’s back to the old system.

The old system has been described as a time portal back to MySpace.

What can you do?

Have all your information in hand, including the bank account you intend to link (routing and account numbers) and your state driver’s license or equivalent government ID.
Link a bank account that you plan to use for a while
Don’t try to use a password manager
Don’t be hasty; mis-typing characters could be unfixable. Once you are logged into TreasuryDirect, be careful to follow the site’s directive to not use your browser’s back, forward or refresh buttons. You should use the navigation on the site itself. Make a mistake, and you'll be logged out of TreasuryDirect.

To buy a savings bond in TreasuryDirect:

Go to your TreasuryDirect account.
Choose BuyDirect.
Choose whether you want EE bonds or I-bonds, then click Submit.
Fill out the rest of the information.

I opened a TreasuryDirect account years ago and have lost my account number. What do I do?

Go to this TreasuryDirect page and fill in your personal information. It must match exactly what TreasuryDirect has on file — for example, if you have moved, you might have to list a previous address.

If the information matches, you’ll answer three security questions. If you respond successfully, you’ll receive an e-mail with your account number.

I’m having trouble buying or managing bonds with the TreasuryDirect website. How can I get help?

You can call TreasuryDirect at 844-284-2676. If the number of callers in the queue becomes too great, an automated message might notify you that TreasuryDirect is no longer accepting calls for the day.

You can reach TreasuryDirect by email by filling out a form on its "contact us" page.

Lisa has been the editor of Kiplinger Personal Finance since June 2023. Previously, she spent more than a decade reporting and writing for the magazine on a variety of topics, including credit, banking and retirement. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.

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