I Bond Calculator

The TreasuryDirect composite rate is: fixed rate plus 2 times the semi-annual inflation rate plus (fixed rate times semi-annual inflation rate). The 2x multiplier annualizes the 6-month inflation rate Treasury publishes every May 1 and November 1, and the cross-product term is a small adjustment so the rate compounds cleanly over six months. With a 1.2% fixed rate and a 2.0% semi-annual inflation rate, the composite works out to 0.012 + 2 x 0.020 + 0.012 x 0.020 = 5.224% annually. Treasury resets this composite rate every six months from your purchase month, so a bond bought in March recalculates each March and September.

An individual can buy up to $10,000 in electronic I Bonds per calendar year through TreasuryDirect. The federal tax-refund program for buying up to $5,000 in paper I Bonds ended on January 1, 2025, so it is no longer an additional current purchase route. Separate entity and gift rules have their own requirements and limits.

I Bonds have a hard 12-month minimum holding period. You cannot redeem before that anniversary date, with no exceptions outside a federally declared disaster area. After 12 months you can redeem any time, but bonds redeemed before they hit five years lose the most recent three months of interest as a penalty. The calculator enforces the 12-month gate and shows a redemption-recommendation message that counts down to the 5-year mark when applicable.

Bonds redeemed at 12 months but before 5 years (60 months) forfeit the last 3 months of accrued interest. The bond is still worth your purchase price plus interest minus that 3-month chunk. Bonds held 5 years or longer pay full accrued interest with no penalty. In practical terms, if your composite rate has been around 5% and you redeem at year 4, you give up roughly 1.25% of the bond's value as the forfeit. Waiting until month 60 turns that penalty off entirely.

I Bond interest is subject to federal income tax and exempt from state and local income tax. You can generally defer federal reporting until redemption or final maturity, or elect annual reporting. A Section 135 education exclusion depends on ownership, age, qualified expenses, other education benefits, and income limits and may be partial. The calculator's toggle applies a full exclusion scenario and does not test those requirements.