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I Bond Calculator
Use this free I Bond calculator to see how a Series I savings bond grows. Enter your purchase amount, the fixed rate, and the semiannual inflation rate, and it works out the composite rate and the value of your bond year by year, with interest compounding every six months. All rates are editable — this page does not fetch live rates — so enter the current rates to get a current estimate.
Locked in for the life of the bond.
Semiannual rate; changes every May and November.
Rates are entered by you and are not fetched live. New I Bond rates are announced every May and November, and the inflation part of your rate changes every six months, so treat any multi-year figure as an estimate based on today's rates.
How it works
A Series I savings bond — usually just called an I Bond — is a savings bond issued by the US Treasury that is designed to protect your money from inflation. Its interest rate has two parts. The fixed rate is set when you buy the bond and never changes for as long as you own it. The inflation rate is based on changes in consumer prices, it is announced every six months, and it applies to every I Bond, old and new. Together they form the composite rate, which is the rate your bond actually earns for that six-month period.
The formula looks odd until you see why each piece is there. The inflation rate is a six-month rate, so it is doubled to give an annual figure — that is the "2 times inflation" term. The small cross term, fixed rate times inflation rate, accounts for the fact that the fixed-rate part of your return also grows with inflation over the period. With a fixed rate of 1.3 percent and an inflation rate of 1.9 percent per six months, the composite rate is 1.3 + 3.8 + 0.0247 = 5.1247 percent, shown as 5.12 percent. Interest is then added to the bond every six months at half the composite rate, so the interest itself starts earning interest — that is semiannual compounding.
Because the inflation part changes every six months, no one can know a bond's exact value years from now. This calculator holds the rates you enter steady for the whole period, which is the standard way to estimate: it answers the question "if rates stayed where they are today, what would the bond be worth?" In real life the inflation rate will move up and down, and each new six-month rate replaces the old one. The fixed rate is the only part you can count on for the full 30-year life of the bond, which is why buyers pay attention to it when rates are announced.
Two holding rules shape every decision about I Bonds. First, you cannot redeem a bond at all during its first 12 months, so money you might need within a year does not belong in an I Bond. Second, if you redeem before 5 years, you lose the last 3 months of interest as a penalty. On a 5-year hold there is no penalty at all. The calculator's early-redemption option applies that penalty: it removes three months of interest at the current composite rate from the final value, so you can compare holding to 5 years against cashing in early. After 30 years the bond stops earning interest entirely, so holding longer than that gains nothing.
I Bonds also have tax features worth knowing. The interest is exempt from state and local income tax, and federal tax can be deferred until you redeem the bond or it matures — you do not pay tax on the interest each year unless you choose to. The annual purchase limit for electronic bonds is $10,000 per person, with a separate $5,000 paper-bond limit when bought with a tax refund, and the minimum purchase is $25. Those limits are why many savers buy a little each year rather than all at once.
Worked example
Buy a $10,000 I Bond with a fixed rate of 1.3 percent and a semiannual inflation rate of 1.9 percent, and hold it for 5 years with rates unchanged.
Step 1: Composite rate — 1.3% + (2 × 1.9%) + (1.3% × 1.9%) = 1.3 + 3.8 + 0.0247 = 5.1247%, shown as 5.12%.
Step 2: Interest per six months — 5.1247% ÷ 2 = 2.56235% per half-year.
Step 3: Compounding — $10,000 × (1 + 0.0256235)10 = $10,000 × 1.2878926 = $12,878.93.
Step 4: Total interest — $12,878.93 − $10,000 = $2,878.93.
Step 5: Penalty check — held for the full 5 years, so no penalty applies.
Enter the same numbers in the calculator and it gives exactly the same result: a composite rate of 5.12% and a value of $12,878.93 after 5 years. Try a 3-year hold with the early-redemption option on: the value before penalty is $11,639.32, the penalty takes $147.23, leaving $11,492.09.
FAQ
How is the I Bond composite rate calculated?
The composite rate combines the fixed rate and the semiannual inflation rate with the formula: composite rate equals fixed rate plus two times the inflation rate plus fixed rate times inflation rate. With a fixed rate of 1.3 percent and an inflation rate of 1.9 percent, the composite rate is 1.3 plus 3.8 plus 0.0247, which is 5.1247 percent, shown as 5.12 percent. Interest then compounds every six months at half the composite rate.
When can I cash in an I Bond?
You must hold an I Bond for at least 12 months — it cannot be redeemed at all before then. If you redeem it before 5 years, you lose the last 3 months of interest as an early-redemption penalty. After 5 years there is no penalty. I Bonds stop earning interest after 30 years, so there is no reason to hold one longer than that.
How often do I Bond rates change?
New rates are announced every May and November. The fixed rate stays the same for the life of a bond you already own, but the inflation rate changes every six months for every bond, so your composite rate changes too. This calculator uses the rates you enter — it does not fetch live rates — so type in the current rates from the Treasury announcement to get a current estimate.
How much can I buy in I Bonds each year?
The annual purchase limit for electronic I Bonds is $10,000 per person per calendar year. You can also buy up to $5,000 in paper I Bonds with a tax refund, which is a separate limit. The minimum purchase is $25 for an electronic bond. This calculator accepts any purchase amount, so you can model a single bond or a full year's limit.
Are I Bonds taxed?
I Bond interest is exempt from state and local income tax, but it is subject to federal income tax. You can defer the federal tax until you redeem the bond or it reaches final maturity at 30 years, or you can choose to report the interest each year. Interest used for qualified higher education expenses may be excluded from federal tax if you meet the income and other rules.