Treasury holds I Bond fixed rate at 0.90%; composite rate rises to 4.26%

Posted on April 30, 2026 by Tipswatch

I Bonds remain an attractive investment for capital preservation.

By David Enna, Tipswatch.com

The Treasury announced this morning it is holding the fixed rate of the U.S. Series I Savings Bond at 0.90%, the rate in effect since since November 2025. This decision sets the I Bond’s six-month composite rate at 4.26% for purchases from May to October 2026.

This is exactly as I predicted, which means the Trump administration is carrying forward the basis of a decade-long formula for determining the fixed rate. That is very good news for I Bond investors.

An I Bond pays interest based on a semi-annual inflation rate (in this case 1.67% from October 2025 to March 2026) and a fixed rate (which remains at 0.90%). Here is how the Treasury combines the two rates to get a composite rate of 4.26%:

The variable rate

The inflation-adjusted rate (often called the I Bond’s variable rate) is now 3.34%. That rate will apply to all I Bonds ever issued, with the starting date depending on the original month of purchase. I Bonds purchased in April will get an annualized composite rate of 4.03% for six months, and then 4.26% for six months beginning in October.

The variable rate of 3.34% means that even I Bonds from past years with fixed rates of 0.0% will earn 3.34% for six months, a yield on a par with high-quality money market funds.

Here are the inflation numbers used to determine the variable rate:

View historical data on my Inflation and I Bonds page.

The fixed rate

Here is the formula — devised by Boglehead geniuses — I have been using to forecast the Treasury’s fixed-rate decision: Apply a ratio of 0.65 to the average real yield of the 5-year TIPS over the last six months. This formula has worked, without fail, for 13 fixed-rate resets since November 2017. it is reassuring to see past practices continued.

The fixed rate is crucial for I Bond investors because it creates the real yield over inflation. A fixed rate of 0.90% means an I Bond will out-perform future inflation by 0.90%. This is a solid fixed rate, in my opinion, and it means your investment can continue to surpass official U.S. inflation for as long as you hold the I Bond, up to 30 years.

The composite rate

Because the fixed rate held at 0.90%, I Bonds purchased in April (too late for that now) will have a full-year return of 4.16%, combining six months of 4.03% and six of 4.26%. I Bonds purchased any time from May to October will earn six months of 4.26%, and then an undetermined composite rate based on the next rate reset on November 1.

This annualized yield of 4.26% is highly attractive in today’s market for safe investments, but keep in mind that an I Bond has to be held for 1 year and then any redemption before 5 years will lose the last three months of interest. In my opinion, I Bond investors should be looking to hold for 5 years and then cash in when they need the money.

FYI: Today’s update from the Treasury continues to carry the purchase limit of $10,000 per person per calendar year. However, it is possible to add to your holdings through gift-box, trusts, or business-owner strategies.

EE Bonds

The Treasury set the fixed rate for Series EE Bonds at 2.40% for purchases from May to October. That is down from 2.50% for purchases through April. After 20 years, EE Bonds automatically double the original purchase amount, which creates an effective return of 3.53% if held for 20 years. Treasury says:

For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.

I suspect the Treasury gets very little investor support for EE Bonds. You can do better with short-term investments (3.75% on the 1-year T-bill) and better with long-term investments (4.97% on the 20-year Treasury note).

I Bonds remain attractive

New investors through October 2026 will be getting a six-month annualized return of 4.26%, better than the current market for short-term Treasury bills. I remain a fan of and advocate for I Bonds. I bought my 2026 allocation in April.

I Bonds work well as a secondary emergency fund, constantly adjusting to inflation. There are no state income taxes, federal taxes are deferred, the maturity date is flexible, and the value of the investment can never decline with “market trends.” You won’t get rich, but this is a strong investment for preserving capital.

If you didn’t buy in April. No problem. This was a “toss-up” decision and now you can buy in May (later in the month is wise) or better yet, just wait it out until October to decide on a purchase. On October 14, the Bureau of Labor Statistics will release the September inflation report, which will set in stone the next variable rate. And by that point we will have a pretty good idea of the next fixed rate. You’ll have a two-week period to make a decision.

If you did buy in April. If you bought your full 2026 allocation before today, you can sit back and await the November rate decision. Whatever that is, it will be available through April 2027, so the purchase cap will reset on January 1. Or … you could be daring and jump into the gift-box loophole.

For the nerds

Here is the entire history of the I Bond’s fixed rate:

And here is the variable rate history:

• Confused by I Bonds? Read my Q&A on I Bonds

• Let’s ‘try’ to clarify how an I Bond’s interest is calculated

• Inflation and I Bonds: Track the variable rate changes

• I Bonds: Here’s a simple way to track current value

• I Bond Manifesto: How this investment can work as an emergency fund

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Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.

PayPal link / Venmo link

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Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Cash alternatives, I Bond, Inflation, Savings Bond, Treasury Bills, TreasuryDirect | 16 Comments

TreasuryDirect, ditch the ‘gift box’ and raise the I Bond purchase cap

Posted on April 26, 2026 by Tipswatch

My solution: Double the purchase cap to at least $20,000 a year.

By David Enna, Tipswatch.com

Last week, TreasuryDirect again sent emails asking holders of savings bonds in gift boxes to deliver them as quickly as possible. I have written about this in the past (here, here, and here) but this email seems to step up the urgency.

The gift box program is used almost exclusively by investors in Series I Savings Bonds, a highly attractive, very safe inflation-linked bond. For more on gift box basics, read this from TheFinanceBuff.com.

I didn’t receive the email, because I delivered all our gift box I Bonds in 2024, the year they were purchased. But readers have sent me the text (you can read the full email and explanation here). Highlight:

Dear TreasuryDirect Customer,

It’s time for some spring cleaning! That includes clearing out your TreasuryDirect gift box by delivering purchased gift bond(s) to your intended recipient. We encourage any TreasuryDirect customers with undelivered gift bonds to deliver them promptly after purchasing so your recipient can access and manage their gift now. …

While you can only deliver one gift bond at a time, there is no limit to the total amount a recipient can receive. However, once they have received $10,000, they should not purchase additional savings bonds that year because gift amounts are applied towards the purchase limit.

Note the wording here: 1) You can deliver only one set at a time, 2) but you can deliver as many individual sets as you want, at any time, and 3) after the delivery, the recipient will not be able to purchase additional savings bonds that year.

In other words, the recipient must make any traditional I Bond purchase — up to $10,000-per-year purchase cap — before receiving the gift box deliveries. After the purchase, the door is wide open for deliveries of unlimited amounts.

This policy, which I Bonds investors have known about anecdotally, appears to create a giant loophole and allows investors with a trusted partner to buy and deliver unlimited I Bonds in one year, one month, even one week.

TreasuryDirect has created an FAQ on the gift box program, which more or less clarifies implications of the email:

Is there a limit to how many gift bonds I can deliver to recipient(s)?

You can only deliver one gift bond at a time. There is no limit to the amount a recipient can receive; however, once they have received $10,000, they should not purchase additional savings bonds that year because gift amounts are applied towards their purchase limit.

Can my recipient cash out gift bonds over the annual purchase limit once they are deposited into their account?

There is no limit to the amount of bonds a recipient can cash out from their TreasuryDirect account, regardless of how the bonds were acquired. Bonds can only be cashed out if it has been at least one year since the bond was purchased.

Is there a deadline for delivering gift bonds?

Delivering gift bonds proactively prepares you for upcoming enhancements and enables your recipient to experience the full benefit of your gift.

Is delivering my gift bonds mandatory?

You are encouraged to deliver gift bonds now to ensure you are prepared for coming enhancements and so your recipient can experience the full benefit of the gift bond.

What happens if I don’t deliver my gift bond(s)?

Gift bond recipients are the sole legal owners as soon as the bonds are purchased, so holding undelivered gift bonds introduces potential complications. While no changes are currently being made to the gifting process, delivering your gifts now reduces the risk of possible issues in the future.

Will there be changes to the gift bond program or is it being eliminated?

Future changes to the gift bond program are still being determined. However, there is no impact to your participation at this time. Stay tuned as more information becomes available on how we’re enhancing your customer experience.

My interpretation

For well over a year, TreasuryDirect has been hinting at major changes to the gift box program and possibly its entire savings bond purchasing system. This email steps up the urgency with a plea to clear out all gift box savings bonds as quickly as possible.

At the same time, it opens the door to “abuse” of the system by allowing unlimited gift box purchases and immediate deliveries. OK … it really isn’t abuse since the Treasury is clearly allowing it as long as deliveries are made quickly (there is a 5-day waiting period). With this plea, Treasury has backed its way into an unintended consequence.

The urgency is strange since Treasury has been hinting at upcoming changes for 18 months, even before President Trump’s election in November 2024. Did the administration turnover delay the changes? Are they now ready to roll out?

A bit of history

Investors never really noticed the gift box program until fall of 2022, when the I Bond had a variable rate of 9.62% and was about to transition to a rate of 6.48%. Those I Bonds had a fixed rate of 0.0% but the composite rate of 9.62% was extremely attractive (the 1-year T-bill was yielding about 4.5%). I Bond mania was in full swing and the gift box program became a viable strategy for investors with a trusted partner.

At that time, the consensus view was that gift box purchases of $10,000 could only be delivered one at a time, each year, and any delivery would lock the recipient out of additional purchases or gift box deliveries in that year. Some investors bought 10 sets in 2022 and it appeared they would have to sit on those 0.0% I Bonds for delivery over the next 10 years. Once TreasuryDirect opened the floodgates with emails urging deliveries “as soon as possible,” those investors could immediately deliver and redeem. The loophole sprang open.

I was never a fan of using the gift box strategy unless the fixed rate was historically high, because the fixed rate is permanent. The only time I used the strategy was in 2024, when the I Bond’s fixed rate was 1.30%. Later that year, I delivered all the gift box swaps and figured I would never again use the strategy.

Common-sense solution

Why do investors use the gift box strategy? Most of the time, these are fairly wealthy people looking to build a stockpile of inflation-protected cash in a very safe investment. For them, the $10,000 per year purchase cap is too small to make a difference in their asset allocation. So they craftily resort to the gift box.

Here’s my solution:

  • The Treasury should immediately raise the savings bond purchase cap to $30,000 a year — equal to the cap that existed from 1998 to January 2008. Adjusted for inflation since January 2008, that cap would be $46,000 today.
  • It should eliminate the gift box program or alter it in a way that allows only small purchases and controlled deliveries. Gifts from grandparents to kids were nice in the past when Treasury issued paper savings bonds, but less accessible in our new age of electronic investments.

As a compromise, I’d accept raising the purchase cap to $20,000 a year — $40,000 for a couple. That would make the I Bond more attractive for sophisticated investors. And it would create an expanded opportunity for investors without a trusted partner, who are essentially locked out of the gift box strategy.

And another thing … TreasuryDirect, please be upfront about future changes you are planning. Let us know in clear terms what to expect.

And a reminder … If you are planning a purchase of the April-issue I Bond, make sure to place your order at TreasuryDirect no later than Tuesday, April 28. Purchases “completed” on April 30 will be May-issue I Bonds. From TreasuryDirect:

I expect we will see the new fixed-rate / composite rate announcement Friday morning about 10 a.m. EDT. I will be posting an update.

Did you get the gift box email? If so, what are your plans? Would you consider using the strategy in 2026 to lock in the 0.9% fixed rate?

• Confused by I Bonds? Read my Q&A on I Bonds

• Let’s ‘try’ to clarify how an I Bond’s interest is calculated

• Inflation and I Bonds: Track the variable rate changes

• I Bonds: Here’s a simple way to track current value

• I Bond Manifesto: How this investment can work as an emergency fund

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Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Cash alternatives, EE Bonds, I Bond, Inflation, Retirement, TreasuryDirect | Tagged , , | 76 Comments

5-year TIPS auction gets a real yield of 1.367%

Posted on April 23, 2026 by Tipswatch

By David Enna, Tipswatch.com

On a day when real and nominal yields were creeping higher, the Treasury’s auction of $26 billion in a new 5-year Treasury Inflation-Protected Security got a real yield to maturity of 1.367%, a good result for investors.

This is CUSIP 91282CQP9. The auction result set its coupon rate at 1.250%. The real yield of 1.367% was very slightly higher than the when-issued prediction of 1.365%. The bid-to-cover ratio was decent at 2.57. This auction was well supported by investors.

All morning, I had been tracking the nominal 5-year Treasury yield, which had been inching higher from 3.88% around 8 a.m. to 3.95% at the auction’s close. That rise, possibly connected to continued dim news from the Mideast, could have been a factor in today’s auction result by pulling real yields higher.

Definition: The “real yield to maturity” of a TIPS is its yield above future U.S. inflation, over the term of the TIPS. So a real yield of 1.367% means an investment in this TIPS would provide a return that exceeds official U.S. inflation by 1.367% for 5 years.

Here is the trend in the 5-year real yield over the last year, based on Treasury estimates, showing that today’s result is in the mid- to -lower range, but higher than very recent trends.

Click on image for larger version.

Pricing

This is a new TIPS, so its coupon rate was set to the 1/8th percentage point below the auctioned real yield. That resulted in an unadjusted price of 99.440535, a slight discount. In addition, this TIPS will carry an inflation index of 1.00235 on the settlement date of April 30. With that information, we can calculate the cost of a $10,000 par value purchase at this auction:

  • Par value: $10,000.
  • Principal on settlement date: $10,000 x 1.00235 = $10,023.50.
  • Cost of investment: $10,023.50 x 0.99440535 = $9,967.42.
  • + accrued interest of $5.13 .

In summary, an investor purchasing $10,000 par value of this TIPS paid $9,967.42 for $10,023.50 in principal on the settlement date. From then on, the investor will earn accruals matching future inflation, plus an annual coupon rate of 1.25% on adjusted principal. The accrued interest will be returned at the first coupon payment on October 15.

Inflation breakeven rate

At the auction’s close, the 5-year Treasury note was trading with a nominal yield of 3.95%, which creates an inflation breakeven rate of 2.58% for this TIPS, the highest level at auction for this term since October 2022. Clearly, developments in the Mideast are raising inflation fears, especially in the shorter term.

Here is the trend in the 5-year inflation breakeven rate over the last year:

Click on image for larger version.

Thoughts

Even though the real yield was well below the 1.702% generated at last April’s originating auction, this seems like a decent result. Since April 2025, the Federal Reserve has cut short-term interest rates by 75 basis points. But at this point, the Fed looks likely to keep rates stable for several months.

In my preview article for this auction, I noted: “I think a real yield level around 1.30% to 1.35% seems reasonable. The Fed won’t be cutting rates anytime soon.” Market yields change by the minute, especially in the midst of global disruptions.

At mid-morning, I asked three AI bots to predict the result of today’s auction. Here were their predictions:

Claude and ChatGPT used my article to predict a range of 1.30% to 1.35%, which due to today’s market events ended up being a bit too low. Google’s Gemini ignored my input and overshot the yield by a wide margin.

TIPS auction results have always been difficult to predict. I’ve learned to be careful, qualified and modest in my predictions.

Did you invest today? What are your thoughts? Meanwhile, here is a history of 4- to 5-year TIPS auctions over the last five years:

• Confused by TIPS? Read my Q&A on TIPS

• TIPS in depth: Understand the language

• TIPS on the secondary market: Things to consider

• TIPS investor: Don’t over-think the threat of deflation

• Upcoming schedule of TIPS auctions

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Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and

Posted in Federal Reserve, Inflation, Investing in TIPS, TreasuryDirect | Tagged , , | 25 Comments

Here comes a rather unexciting 5-year TIPS auction

Posted on April 19, 2026 by Tipswatch

By David Enna, Tipswatch.com

Unexciting? These days, maybe that’s a good thing.

The U.S. Treasury on Thursday will auction $26 billion of a new 5-year Treasury Inflation-Protected Security — CUSIP 91282CQP9. The real yield to maturity and coupon rate will be set by the auction results.

At Friday’s market close, the Treasury was estimating the real yield of a full-term 5-year TIPS at 1.28%. Unless yield trends change dramatically this week, this TIPS will get the lowest April result in four years.

Definition: The “real yield” of a TIPS is its yield above official future U.S. inflation, over the term of the TIPS. So a real yield of 1.28% means an investment in this TIPS would provide a return that exceeds U.S. inflation by 1.28% for 5 years.

Will the auctioned real yield end up at 1.28%? Maybe, but watch for continued volatility this week. Also, keep in mind that April’s 5-year TIPS auction tends to get a bit higher real yield than the “market” estimate, because of its closing-months exposure to potential deflation in non-seasonally-adjusted CPI.

Since the April 2025 auction, the Federal Reserve has cut its federal funds rate three times — a total of 75 basis points. Of all TIPS auctions, the 5-year term is the most sensitive to cuts in short-term interest rates. I think a real yield level around 1.30% to 1.35% seems reasonable. The Fed won’t be cutting rates anytime soon.

Here is the long view of the 5-year real yield over the last 23 years, showing that 1.28% remains relatively attractive, but well below the recent high of 2.51% in October 2023. Fed rate cuts began in September 2024.

Click on image for larger version.

Pricing

Because this is a new TIPS, Treasury will set its coupon rate to the 1/8th percentage point below the auctioned real yield. That means its unadjusted price will be slightly below par value. CUSIP 91282CQP9 will carry an inflation index of 1.00235 on the settlement date of April 30, which will slightly increase the investment cost and the principal purchased by investors.

I’d guess the coupon rate will end up being 1.25%. The investment cost should be near par value, meaning if you purchase $10,000 par value of this TIPS, you will be paying somewhere around $10,000.

Inflation breakeven rate

The 5-year Treasury note closed Friday with a nominal yield of 3.84%, creating an implied inflation breakeven rate of 2.56% using current Treasury estimates. That’s a high number, the highest since a 3.34% breakeven at the April 2022 auction, just as U.S. inflation was surging higher. (Inflation in April 2022 was running at 8.3%, compared to 3.3% today.)

Is 2.56% too high? Probably not, given the uncertain future of energy prices and potential pass-through costs. Inflation over the last five years, ending in March, has averaged 4.5%.

Here is the long view of inflation breakeven rates over the last 23 years, showing the dramatic peak in spring 2022:

Click on image for larger version.

Alternatives

The Series I Savings Bond can still be purchased this week with a fixed rate of 0.90%, which is fairly competitive with a 5-year TIPS at 1.28%. The I Bond offers rock-solid deflation protection, better compounding, tax deferral of interest, and a flexible maturity date.

The TIPS works best for setting aside a specific amount of inflation-adjusted cash for use 5 years into the future. The I Bond works best as a secondary emergency fund, storing inflation-adjusted cash for use when you need the money.

Best-in-nation 5-year bank CDs are yielding around 4.0%, just a bit better than the 5-year Treasury note. That pushes the inflation breakeven rate out to about 2.72%. I consider a 5-year CD paying 4% to be attractive. I’d prefer the TIPS, though, for the inflation protection.

Thoughts

Investors should be cautious in using brokerage yield predictions to forecast where this auction is heading. Vanguard right now is showing an “indicative yield” of 1.20% for this auction. That is most likely based on current trading in the most-recent 5-year TIPS, issued in October. The October TIPS gets a lower real yield than the April TIPS. More on this.

The Treasury’s daily estimate , currently 1.28%, is going to be a more reliable predictor. But remember that yields will be changing before the auction.

I won’t be buying at this auction because I already have filled the 2031 rung of my long-term TIPS ladder. For investors, a real yield of 1.28% for 5 years qualifies as both “not bad” and “not exciting.” But today’s real yields are much better than the auction result of April 22, 2021 … -1.631%.

This TIPS auction closes Thursday at 1 p.m. ET. Non-competitive bids at TreasuryDirect must be placed by noon Thursday. If you are putting an order in through a brokerage, make sure to place your order Wednesday or very early Thursday, because brokers cut off auction orders before the noon deadline.

I will be posting the auction results soon after the close on Thursday. Here is a history of results for this term over the last 5 years:

• Confused by TIPS? Read my Q&A on TIPS

• TIPS in depth: Understand the language

• TIPS on the secondary market: Things to consider

• TIPS investor: Don’t over-think the threat of deflation

• Upcoming schedule of TIPS auctions

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Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I welcome donations, any amount. And FYI, ads on this site pay for about one visit to Costco.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Bank CDs, Federal Reserve, I Bond, Inflation, Investing in TIPS, Savings Bond, TreasuryDirect | Tagged , , | 15 Comments

I Bond dilemma: Buy in April or just keep waiting?

Posted on April 12, 2026 by Tipswatch

I am buying in April. A lot of you will disagree. There is no wrong answer.

By David Enna, Tipswatch.com

Let’s take a moment to ponder what happened in March: The United States went to war in the Mideast, gas prices surged higher, the stock market fell into chaos (briefly) and U.S. inflation took a huge leap higher.

Way down on our list of concerns was: What’s going to happen to Series I Savings Bonds at the May 1 rate reset? On February 27, I would have confidently told you:

  • The variable rate was going to fall to about 2.0% from the current 3.12%.
  • The fixed rate was going to fall to 0.8% from the current 0.9%.
  • And the composite rate would fall (for I Bonds purchased from May to October) to about 2.81%, down from the current 4.03%.

Wrong. Wrong. Wrong.

But before we get into that, let’s look at …

I Bond basics

I Bonds are U.S. government savings bonds designed to protect your savings from inflation. They offer a combination of interest rates that adjust for inflation, making them a popular choice for conservative investors.

  • The fixed rate of an I Bond will never change. Purchases through April 30, 2026, will have a fixed rate of 0.90%, which means the return will exceed official U.S. inflation by 0.9% until the I Bond is redeemed or matures in 30 years. The fixed rate will reset on May 1.
  • The inflation-adjusted rate (often called the I Bond’s variable rate) changes each six months to reflect the running rate of inflation. That rate is currently 3.12%, annualized, for six months. It will adjust again on May 1, 2026, rolling into effect for all I Bonds, no matter when they were purchased.
  • The current composite rate is 4.03% annualized for six months for purchases through April 2026.

I Bonds are an extremely safe and conservative investment. Interest accrues monthly and principal can never decline, even in times of deflation. Investments are limited to $10,000 per person per calendar year for electronic I Bonds held at TreasuryDirect. There is also a “gift box” strategy some investors use to stack purchases for future years.

I Bonds have many positives. For example, earnings are free of state income taxes and federal taxes can be deferred until the I Bond is redeemed or matures. Also, I Bonds are a simple investment to buy and track, much simpler than a TIPS with a constantly changing market value and inflation accruals that update daily.

The variable rate

This is set in stone: Because of March’s lofty inflation, the I Bond’s inflation-adjusted variable rate will rise from the current 3.12% to a new rate of 3.34%. This is based on non-seasonally adjusted inflation for the months of October 2025 to March 2026, an increase of 1.67%. The I Bond’s rate-setting formula doubles the six-month inflation rate to create the new variable rate.

View historical data on my Inflation and I Bonds page.

All I Bonds, no matter when they were issued, will eventually get the variable rate of 3.34% for six months, with the starting month depending on the original purchase month. From TreasuryDirect:

It’s important to remember that the new variable rate will apply to all I Bonds ever issued (no I Bonds have yet matured). A purchase in April will get that new, higher variable rate starting in October.

Conclusion: The I Bond’s variable rate will rise to 3.34% at the May 1 reset.

The fixed rate

The Treasury has no legal requirement or public formula for setting the I Bond’s fixed rate. The decision is at “the discretion of the Treasury Secretary.” However, we know Treasury tracks trends in real yields and adjusts accordingly. This forecasting formula has worked for the last decade: Take the average real yield of the 5-year TIPS over the preceding six months and apply a ratio of 0.65.

For this reset, we are interested in 5-year real yields from November 2025 to April 2026. There are only 13 market days left before the reset, so we can now get a solid projection:

The formula, which has been accurate for a decade, projects that the fixed rate will remain at the current level, 0.9%. That would be true even if the 5-year real yield — currently at 1.36% — suddenly plummeted to an average of 1.10% for the next 13 market days.

However … This projection is based on 10 years of Treasury history in setting the I Bond’s fixed rate. But the Treasury could change course at any time and we should be aware of that. President Trump’s first-term Treasury followed the formula and has continued to do so in his second term.

Conclusion. It looks highly likely that the I Bond’s fixed rate will hold at 0.90%.

Composite rate

If we assume the fixed rate holds at 0.90% and the variable rate rises to 3.34%, we are looking at a new composite rate of 4.26%, up from the current 4.03%, for I Bonds purchased from May to October 2026. This is based on the formula the Treasury uses to calculate the composite rate:

[Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

If I did my math right, this formula results in the composite rate of 4.26%.

This same annualized composite rate, 4.26%, will apply to I Bonds purchased in April, after six months of earning the current rate of 4.03%.

So we know that an investor purchasing in April will earn 4.03% for six months and then 4.26% for six months, earning a combined rate of 4.16%. An investor purchasing any time from May to October will earn 4.26% for the first six months and then an undetermined rate for the next six months.

Conclusion. The I Bond’s composite rate will rise to 4.26% at the May 1 reset.

The buying decision

Buy now. As I noted at the top, I will buy my full allocation of I Bonds ($10,000 per person per year) later in April. With that decision, I know I will earn 4.16% over the next 12 months, while retaining the permanent 0.90% fixed rate. This is the “sure thing” decision, and I happen to have cash available to make the purchase.

If you are buying in April, I recommend setting the purchase date no later than April 28 on TreasuryDirect to make sure it gets processed ahead of the rate shift.

Buy later. Buying in May would be fine, but most investors who don’t buy in April will hold off investing until at least October 14, when the September inflation report is released and sets the next variable rate, to be reset November 1. At that point investors will also have a very good idea of the next fixed rate.

If you think the fixed rate could be rising in November, it makes sense to wait. Using our standard formula, the 5-year average real yield would need to rise to 1.47% over the next six months to boost the fixed rate to 1.0%. That isn’t unreasonable. So waiting could make sense.

One thing to consider is that the fixed rate announced in November will be available for purchases through April 2027, when the purchase cap resets. Also, realize that a 10-basis-point increase in the fixed rate amounts to $10 a year on a $10,000 investment. It’s not life changing.

Risks of buying now. The fixed rate soars higher in November and you feel miserable about your impatient purchase. (Not likely, but anything can happen.)

Risks of buying later. The biggest risk (also slim) is that the Treasury tosses out its traditional rate-setting formula and drops the I Bond’s fixed rate at the May reset. Another more possible risk, but not as important financially, is that inflation will plummet from April to September and the November variable rate is lower than the current 3.12%.

April 23, 2026, update: TreasuryDirect has now posted this notice on its homepage:

Over the years, TreasuryDirect has refined its wording on this sort of notice and this one — finally! — is accurate. The new rates will be announced April 30 and any purchase on April 30 will become a May 2026 I Bond.

Short-term investment?

A combined composite rate of 4.16% looks attractive when you compare it to the nominal yields of a 4-week (3.67%) or 1-year (3.70%) T-bill. But remember that you have to hold an I Bond for one year and if you redeem at that point you lose the latest three months of interest.

Not worth it. If you buy late in April and then redeem in April 2027, you will lose the last three months of interest, meaning your total return would be 3.08%. You can do better buying a 1-year T-bill.

Rolling over I Bonds

If you are holding I Bonds with 0.0% fixed rates, you are currently earning a composite rate of 3.12%, and that will rise to 3.34% when the new variable rate kicks in. That’s not bad. There’s no reason to rush to sell these, but if you need to raise cash to purchase 0.90% I Bonds, redeeming and repurchasing makes sense.

I generally encourage people to continue holding I Bonds “until you need the cash.” It’s great to have these savings bonds growing tax-deferred with zero risk.

If you do a roll over, you will owe federal income taxes on the interest earned, and if your withdrawal is more than $10,000 (because of earned interest) you’ll only be able to buy $10,000 in new I Bonds in 2026. Also, time your redemption for early in the month because you earn no interest in the month of redemption.

Gift-box strategy

I don’t think there is a compelling need to “load up” on I Bonds in 2026, but that might change later in the year if the fixed rate surges higher. Although I have used it, I am not a fan of the gift-box strategy, mainly because the Treasury has made no attempt to clarify the rules and in fact has muddied the waters.

Conclusion

When should you purchase? There is no wrong answer. Buying in April or later in the year will likely generate similar financial returns. Getting an I Bond with a fixed rate of 0.90% remains attractive. This is a personal decision, but I still encourage investing in I Bonds as an inflation-adjusted, tax-deferred store of cash.

What are your investment plans? Discuss in the comments section!

• Confused by I Bonds? Read my Q&A on I Bonds

• Let’s ‘try’ to clarify how an I Bond’s interest is calculated

• Inflation and I Bonds: Track the variable rate changes

• I Bonds: Here’s a simple way to track current value

• I Bond Manifesto: How this investment can work as an emergency fund

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Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Cash alternatives, Federal Reserve, I Bond, Inflation, Savings Bond, TreasuryDirect | 69 Comments