I bonds interest rates — TreasuryDirect (2024)

FAQs

I bonds interest rates — TreasuryDirect? ›

The composite rate for I bonds issued from May 2024 through October 2024 is 4.28%.

The current composite I bond rate is 4.28%. This includes a 1.30% fixed rate and a 1.48% inflation rate. The current rate applies for six months to bonds purchased between May 1, 2024, and Oct. 31, 2024.

The cons of investing in I-bonds

There's actually a limit on how much you can invest in I-bonds per year. The annual maximum in purchases is $10,000 worth of electronic I-bonds, although in some cases, you may be able to purchase an additional $5,000 worth of paper I-bonds using your tax refund.

The composite rate for I bonds issued from May 1, 2024, through Oct. 31, 2024, is a combination of a fixed rate of 1.3 percent and an inflation rate of 2.96 percent.

Yes, you can purchase up to $10,000 in electronic I bonds each calendar year. You can also buy an additional $5,000 in paper I bonds using your federal tax return.

Can I cash it in before 30 years? You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.

You can count on a Series I bond to hold its value; that is, the bond's redemption value will not decline.

TIPS offer greater liquidity and the higher yearly limit allows you to stash far more cash in TIPS than I-bonds. If you're saving for education, I-bonds may be the way to go.

If you're stashing cash for just a few years, locking in one of today's historically high CD rates is the better bet. But for long-haul savings, I bonds can ensure your cash is always safely out-earning inflation.

Are I bonds tax free? ›

The interest earned by purchasing and holding savings bonds is subject to federal tax at the time the bonds are redeemed. However, interest earned on savings bonds is not taxable at the state or local level.

The interest is taxed in the year the bond is redeemed or reaches maturity, whichever comes first. Investors can defer paying taxes on the interest until the bond is redeemed or matures, or they can pay taxes annually on the interest earned.

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TreasuryDirect.gov is the one and only place to electronically buy and redeem U.S. Savings Bonds. We also offer electronic sales and auctions of other U.S.-backed investments to the general public, financial professionals, and state and local governments.

Treasury bonds—also called T-bonds—are long-term debt obligations that mature in terms of 20 or 30 years. They're essentially the opposite of T-bills as they're the longest-term and typically the highest-yielding among T-bills, T-bonds, and Treasury notes.

The interest gets added to the bond's value

I bonds earn interest from the first day of the month you buy them. Twice a year, we add all the interest the bond earned in the previous 6 months to the main (principal) value of the bond. That gives the bond a new value (old value + interest earned).

I bonds have earned their reputation as an inflation-fighting tool for retirees. As of May 2024, I bonds are returning 4.28%, which is lower than the same period in 2023 but still well ahead of the inflation rate of 3.5%. The previous I bond rate stood at 5.27%, set in November 2023.

1 Year Treasury Rate is at 5.11%, compared to 5.07% the previous market day and 5.24% last year. This is higher than the long term average of 4.90%.

Bottom line. I bonds, with their inflation-adjusted return, safeguard the investor's purchasing power during periods of high inflation. On the other hand, EE Bonds offer predictable returns with a fixed-interest rate and a guaranteed doubling of value if held for 20 years.

Line chart of I bond rates from May 2018 to May 2023. The rates are as follows: May 2018, 2.52%; November 2018, 2.83%; May 2019, 1.9%; November 2019, 2.22%; May 2020, 1.06%; November 2020, 1.68%; May 2021, 3.54%; November 2021, 7.12%; May 2022, 9.62%; November 2022, 6.89%; May 2023, 4.3%.