5 Key Factors about I Bond

What is Series I Bond?

It’s a low-risk, inflation-indexed, savings vehicle.

How do you purchase it?

You can purchase it electronically, directly from the Treasury website, in any denomination from $25 up to $10,000 in a single calendar year.

Here’s the link to purchase:


What is the earnings rate?

It’s a combination of a fix-rate return and a semiannual inflation rate. The semiannual inflation rate is based on changes in the Consumer Price Index for all urban consumers (CPI-U). Currently, the earnings rate is 9.62%. It has been around this rate for recent decades, safe and steady.

See the rate of return from 1998:


How do you redeem the bond?

It must be held for at least 12 months. There will be a three-month interest penalty for bonds redeemed within five years of issue.

How are the interest earnings taxed?

Tax is deferred until maturity and redemption. It is not subject to state income tax. Interest can be excluded from gross income if used for higher education costs if the modified adjusted gross income is below a certain threshold.