I Bonds: Inflation-Linked Savings Bonds
Good inflation protection, poor liquidity for the first year. Know both before buying.
At a glance
Figures checked 1 Sep 2026
What to take away
- Composite rate combines a fixed rate for the life of the bond with an inflation rate that resets each May and November.
- Locked for 12 months, with a three-month interest penalty before five years.
- Annual purchase limit is $10,000 per person electronically.
Series I savings bonds are designed to preserve purchasing power. The composite rate has two parts: a fixed rate set when you buy, which never changes, and an inflation rate that resets every six months based on CPI.
The liquidity rules
You cannot redeem at all for twelve months. Between one and five years, redemption costs you the last three months of interest. After five years there is no penalty. This makes I bonds unsuitable for an emergency fund and reasonable for money you know you will not need for at least a year.
Because the inflation component resets, the headline rate you see today is not what you will earn for the whole holding period. The fixed rate is the part that determines your long-run real return.
Common questions
The electronic limit is $10,000 per person per calendar year. Separate limits may apply for trusts and businesses, and rules change — check TreasuryDirect for current terms.
Interest accrues without being taxed until you redeem, unless you elect otherwise. It is exempt from state and local tax.