Calculate I Bond interest with composite rate, inflation adjustment, and early redemption penalties.
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Based on your inputs
| Purchase Amount | $10,000 |
|---|---|
| Fixed Rate | 1.3% |
| Composite Rate | 4.5% |
| Gross Value | $15,606 |
| Value After Penalty | $15,606 |
| Total Interest Earned | $5,606 |
| Federal Tax (22%) | -$1,233 |
| After-Tax Value | $14,373 |
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I Bonds have two rate components that combine into a composite rate:
Fixed Rate: Set when you buy the bond, stays the same for the life of the bond (30 years). Currently 1.30% (as of Nov 2024).
Inflation Rate: Adjusts every 6 months (May and November) based on changes in CPI-U. Can be negative if there's deflation, but the composite rate won't go below 0%.
Composite Rate Formula:
Composite = Fixed Rate + (2 × Semiannual Inflation Rate) + (Fixed Rate × Semiannual Inflation Rate)
Example: Fixed 1.30%, semiannual inflation 1.85%
Composite = 0.013 + (2 × 0.0185) + (0.013 × 0.0185) = 0.013 + 0.037 + 0.00024 = 5.02%
Interest compounds semiannually on the 1st of the month, 6 months after your purchase month. If you bought in March, interest compounds in September and March.
Each 6-month period, the current composite rate (divided by 2) is applied to your current value, increasing the principal for the next period.
• 0-12 months: Cannot redeem
• 1-5 years: Can redeem but forfeit last 3 months of interest
• 5-30 years: Can redeem with no penalty
• 30 years: Bond matures, stops earning interest
The composite rate changes every May and November based on the latest CPI-U inflation data. Always check TreasuryDirect.gov for the live rate before buying — the defaults in this calculator are the last published values we know about and are updated by our team when new rates are announced.
$10,000 per person electronically via TreasuryDirect, plus $5,000 in paper bonds purchased with your tax refund. Married couples can buy $20,000 electronically.
I Bonds are excellent for inflation protection and safe savings. They're best for emergency funds or short-to-medium-term savings (1-5 years) where you want to at least keep pace with inflation.
Exempt from state and local tax. Federal tax can be deferred until redemption. If used for qualified education expenses, may be completely tax-free.
If you redeem an I Bond before five years, you forfeit the last three months of accrued interest. After five years, there is no penalty. I Bonds cannot be redeemed at all during the first 12 months after purchase.
The composite rate equals the fixed rate plus two times the semiannual inflation rate plus the product of both rates. This formula ensures your return adjusts with inflation while preserving the fixed rate component for the life of the bond.
The fixed rate is set when you buy and stays the same for 30 years. The inflation rate adjusts every six months based on CPI-U data. Together they form the composite rate that determines your actual earnings each period.
Yes. If you meet income limits and use the proceeds for qualified higher education expenses at an eligible institution, the interest may be completely exempt from federal tax. You may want to be at least 24 years old when the bond was issued.
I Bond interest compounds semiannually on the first of the month, six months after your purchase date. Each compounding period adds the earned interest to your principal, which then earns interest at the new composite rate.
Purchase electronic I Bonds at TreasuryDirect.gov with a limit of $10,000 per person per calendar year. You can also buy up to $5,000 in paper I Bonds by directing part of your federal tax refund using IRS Form 8888.
Composite Rate = Fixed Rate + (2 × Semiannual Inflation Rate) + (Fixed × Inflation)
Interest compounds semiannually. Early redemption (<5 years) forfeits last 3 months of interest.
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
Found an error in a formula or source? Report it →
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.