An I bond's interest rate is two rates combined: a fixed rate that is set when you buy and never changes, and an inflation rate that Treasury resets every six months from the Consumer Price Index. So the overall rate, as TreasuryDirect puts it, "can go up" and "can go down". New figures are announced every 1 May and 1 November.
This page shows how the two parts combine, works TreasuryDirect's formula on illustrative numbers, and dwells on a detail that is easy to get wrong: your bond changes rate every six months from its own issue month, which falls on 1 May and 1 November only for a bond issued in May or November. It prints no current rate; why, and where to read the official one, is near the end.
The two parts of an I bond's rate
TreasuryDirect sums it up: "The overall rate is calculated from a fixed rate and an inflation rate. The fixed rate never changes. The inflation rate is reset every 6 months and, therefore, so is the overall rate." The overall figure is also called the combined, composite or earnings rate.
The fixed rate is known the day you buy. Treasury announces one every 1 May and 1 November, and it "then applies, for the life of the bond, to all I bonds that we issue during the next 6 months". The regulation says it is always 0.00% or higher but "is not a guaranteed minimum rate".
The inflation rate is set on the same two days from the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U), all items, "including food and energy". It measures six months: the May rate reflects the change in CPI-U from September to March, the November rate the change from March to September, rounded to the nearest hundredth of a percent.
On illustrative index values, a CPI-U of 300.000 in September and 303.600 the following March is a six-month change of 1.20%, the figure the formula takes. Treasury's press releases also state the inflation component annualised, which is simply double; put that figure in the formula and inflation is counted twice.
How the I bond rate is calculated
TreasuryDirect publishes the formula in these words:
Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]
Rates go in as decimals, so 1.00% is 0.0100. The middle term doubles the six-month inflation figure to put it on an annual footing; the last is a small cross-product of the two. The regulation, 31 CFR 359.14, writes the formula differently, but multiplied out it is identical.
A worked example (illustrative rates)
An illustrative fixed rate of 1.00% and an illustrative six-month inflation rate of 1.20%:
| Part of the formula | Illustrative value |
|---|---|
| Fixed rate | 0.0100 |
| 2 × semiannual inflation rate (2 × 0.0120) | 0.0240 |
| Fixed rate × semiannual inflation rate (0.0100 × 0.0120) | 0.00012 |
| Composite before rounding | 0.03412 |
| Composite rounded | 0.0341, or 3.41% |
This follows TreasuryDirect's own worked example, which rounds to four decimal places (the nearest hundredth of a percentage point) without stating a rule, so treat your own result as a check on the official figure, not a substitute.
Same bond later, different bond now (illustrative)
If the next six-month inflation figure is an illustrative 0.60%, the fixed rate stays at 1.00% and the composite becomes 0.0100 + 0.0120 + 0.00006 = 0.02206, or 2.21%.
A second bond, bought when the fixed rate was 0.00%, earns 0.0000 + 0.0120 + 0 = 0.0120, or 1.20%, in the period when the first earns 2.21%: with no fixed rate, the composite is just the annualised inflation figure. Same inflation rate, different fixed rates, and the gap lasts for the life of each bond.
Your bond's rate changes on its own schedule
This is the part that is easy to get wrong. Treasury announces new rates in May and November, but in TreasuryDirect's words, "the date when the rate changes for your bond is every 6 months from the issue date of your bond."
The issue date is the first day of the month in which Treasury receives the money: a bond bought on 10 July is dated 1 July. A purchase request at the very end of a month may be given the next month's issue date, depending on when the funds arrive. From the issue month the schedule repeats every six months, and TreasuryDirect's month-by-month table reduces to these pairs:
| Bond issued in | Its rate changes on |
|---|---|
| January or July | 1 January and 1 July |
| February or August | 1 February and 1 August |
| March or September | 1 March and 1 September |
| April or October | 1 April and 1 October |
| May or November | 1 May and 1 November |
| June or December | 1 June and 1 December |
Only bonds issued in May or November change rate on the announcement dates. At each change, in the regulation's words, "The most recently announced composite rate applies to a bond during its next semiannual rate period": the bond's own fixed rate combined with the latest inflation rate.
An illustrative timeline
A bond bought on 20 February:
- 1 November, the year before. Treasury announces a fixed rate and an inflation rate. Bonds issued from November to April keep that fixed rate for life.
- 20 February. The purchase. The issue date is 1 February, and for its first six months the bond earns the composite rate announced in November.
- 1 May. New rates are announced. Nothing changes for this bond.
- 1 August. First reset: its own fixed rate plus May's inflation rate, for six months.
- 1 November. New rates again, and again nothing changes for this bond.
- 1 February, a year after issue. Second reset, to its fixed rate plus November's inflation rate. The 12-month lock described below ends here too.
So inflation measured from September to March reaches this bond only from 1 August, and applies until the end of January. The regulation's own summary is that an inflation reading "may affect interest accruals from 3 to 13 months from the date that the CPI-U is measured." The rate in the news after an announcement is what a new bond earns for its first six months; an older bond moves to the new inflation rate only at its own next reset.
The zero floor, and what deflation does
Because the inflation term can be negative, the composite can fall below the fixed rate. TreasuryDirect: "Deflation can bring the combined rate down below the fixed rate (as long as the fixed rate itself is not zero)." That is why the regulation will not call the fixed rate a minimum.
The composite cannot go below zero: "if the inflation rate is so negative that it would pull the combined rate below zero, we don't let that happen. We stop at zero." And when deflation completely offsets the fixed rate, the regulation says a bond's redemption value for any month "will not be less than the value for the preceding month". A zero composite means six months of earning nothing, not a fall in value.
Two illustrative cases, then one from history:
| Case | Fixed rate | Six-month inflation | Formula result | Composite |
|---|---|---|---|---|
| Illustrative, mild deflation | 1.20% | −0.40% | 0.003952 | 0.40%, below the fixed rate |
| Illustrative, deeper deflation | 0.50% | −1.00% | −0.01505 | 0.00% (the floor) |
| History: the highest fixed rate, against the 1 May 2009 inflation rate | 3.60% | −2.78% | −0.0206008 | 0.00% (the floor) |
Because inflation counts twice, a six-month fall in prices of about half the fixed rate cancels it: at an illustrative 1.00% fixed rate, the composite reaches zero once the six-month figure falls to about −0.50% (−0.4975%). Negative inflation rates have happened: TreasuryDirect's table lists two, −2.78% set on 1 May 2009 and −0.80% set on 1 May 2015.
How the interest builds: monthly, compounded twice a year
TreasuryDirect: "I savings bonds earn interest monthly. Interest is compounded semiannually, meaning that every 6 months we apply the bond's interest rate to a new principal value", the old principal plus the previous six months' interest. A bond earns from the first day of its issue month, and each month's interest is added to its value at the start of the next month.
Each six-month period adds half the annual composite. On the illustrative rates above, $10,000 at 3.41% and then 2.21% grows to $10,170.50 at six months and $10,282.88 at a year, before the rounding Treasury applies to the values it publishes; the second period's $112.38 is earned on $10,170.50, not on $10,000. A full year at a steady illustrative 3.41% would reach $10,343.91, which is $2.91 more than the $10,341.00 that simple interest would give: the gap APR vs APY explains.
The rules around the rate, in brief
Each of these affects what a bond actually earns:
- 12 months locked. No cashing in the first 12 months from the issue date. TreasuryDirect can waive this in declared disaster areas and, its FAQ says, "in some cases" of financial hardship.
- Before five years, three months' interest goes. Cash before five years and "you lose the last 3 months of interest": after 18 months, you get the first 15. The penalty never takes the value below what you paid, and the values TreasuryDirect shows for bonds under five years old already leave those months out. A CD's penalty is a term each bank writes into its own contract, as the CD penalty page shows; this one is set by regulation.
- 30 years. Interest stops when you cash the bond or it reaches 30 years old, whichever comes first.
- $10,000 a year. Per Social Security number, in electronic I bonds each calendar year, with a separate $10,000 for EE bonds; the two limits do not combine.
- Electronic only. Since 1 January 2025 I bonds are sold only in a TreasuryDirect account, from $25 and then to the penny. The same date ended the option of buying paper I bonds with a tax refund.
- Tax. Federal income tax applies; state and local income tax does not, though federal estate, gift and excise taxes and state estate or inheritance taxes do. If you use the cash method of accounting, as most individual taxpayers do, you can report the interest each year or defer it until the year you cash or dispose of the bond or the year it matures, whichever is earlier; under an accrual method it must be reported each year as it accrues. When you cash a bond you may receive a Form 1099-INT, whose box 3 should show the interest, and IRS Publication 550 sets out both methods. The state exemption rests on 31 U.S.C. 3124, which also exempts Treasury bill interest from state income tax; how Treasury bill interest is taxed covers that side.
I bonds and Treasury bills
Both are obligations of the US government, and both pay interest that is federally taxable and exempt from state and local income tax. The rate works quite differently.
| I bond | Treasury bill | |
|---|---|---|
| How the rate is set | A fixed rate plus an inflation rate that resets every six months | Fixed at auction for the bill's term |
| How the interest arrives | Added to the bond's value and compounded twice a year | Bought at a discount or at par; face value is paid at maturity |
| How long it runs | Earns for up to 30 years | 4 to 52 weeks |
| Getting out early | Not in the first 12 months; the last three months' interest is lost before five years | Can be sold before maturity at the market price, through a bank, broker or dealer (not a 4-week bill bought in TreasuryDirect) |
| Purchase limit | $10,000 a year per Social Security number | Up to $10 million in a non-competitive bid |
What Treasury bills are explains discount pricing and the auction, and HYSA vs CD vs T-bills runs the after-tax comparison against bank savings. The 12-month lock is also why where to keep an emergency fund keeps I bonds out of the first tier of emergency money.
The fixed rate since 1998: history, not a forecast
TreasuryDirect's table of fixed rates begins on 1 September 1998, at 3.40%. Since then the highest was 3.60%, on 1 May 2000, and the lowest 0.00%, set 16 times, most recently on 1 May 2022. These are historical figures, not illustrative ones, and they say nothing about the next announcement. What they show is how much the one part of an I bond's return fixed for life has depended on when the bond was bought.
Where to find the current I bond rate, and why it is not printed here
TreasuryDirect's I bond interest rates page shows the composite and fixed rate for bonds issued in the current six-month window, with tables of past fixed and inflation rates. New figures come each 1 May and 1 November; if Treasury is not open for business that day, the announcement moves to the next business day, but the rates still take effect on the first of the month. The Bureau of the Fiscal Service's press release is posted on TreasuryDirect's news pages.
For a bond you already hold, find its issue month in the I bond rate chart, which lists the fixed, inflation and combined rates for every issue period. Reading the rates needs no account. Buying does, and after 28 October 2026 ID.me is the only way to log in to TreasuryDirect (Login.gov cannot be used); without it, an owner can still manage an account by paper forms but cannot sign in online or make new purchases.
This page prints none of these numbers because they change every six months: a figure printed here would be wrong for new purchases from the next 1 May or 1 November, on a date a reader might not notice. And the announced rate is only what a new bond earns for its first six months; for a bond you already hold, the rate chart is the answer.
Reading the next announcement
- Which number is fixed for life? The announced fixed rate, for bonds issued in the next six months. Older bonds keep their own.
- Which inflation figure? The six-month one goes into the formula, not the annualised one.
- When does it reach your bond? At your bond's next reset, counted in six-month steps from its issue month.
- What does not change? Your bond's fixed rate, the zero floor, the 12-month lock and the three-month rule before five years.
More on I bonds
When I bonds mature covers the 30-year life, what happens at final maturity, whether I bonds expire, and when a bond can first be cashed.
How to cash I bonds walks through redeeming electronic and paper bonds, and what cashing before five years costs.
EE bonds vs I bonds compares the two series, including the arithmetic behind the EE bond's 20-year doubling.
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