April 30 update: I Bond gets a new fixed rate of 1.10%, composite rate of 3.98%
By David Enna, Tipswatch.com
Sometime on Wednesday, April 30, the Treasury is likely to unveil its new fixed, inflation-adjusted and composite interest rates for the U.S. Series I Savings Bond. In the past, using reliable analysis methods I could tell you:
- The new inflation-adjusted rate will be 2.86%, up from the current 1.90%.
- The fixed rate will be 1.10%, down from the current 1.20%.
- The composite rate, which combines the fixed and variable rates according to a set formula, will be 3.98%, up from the current 3.11%.
I think these will be the most likely results for I Bonds purchased from May to October 2025. In fact, I am fairly confident these will be the results, but not 100% confident. There are too many uncertainties in Washington these days for certainty.
Inflation-adjusted rate
Of these three, the inflation-adjusted variable rate of 2.86% is a certainty. It is based on six months of inflation from October 2024 to March 2025, which ran at 1.43%. That rate is doubled to reach the variable rate of 2.86%.
The fixed rate
The Treasury has no announced formula for setting the I Bond’s fixed rate, meaning there is no calculation required by law or regulation enforcing the process. It is up to a decision by Treasury officials. However, I Bond watchers have settled on a forecasting tool that seems to work: Apply a ratio of 0.65 to the average 5-year TIPS real yield over the preceding six months. This formula has worked without fail at least since 2017.
On Friday I updated my 5-year real yield data from the date of the last reset on November 1, 2024, to the close of April, 25, 2025. The data predict the I Bond’s fixed rate will fall to 1.10% at the May 1 reset:
The I Bond’s fixed rate is always set to the one-tenth decimal point and that means the result of the 0.65 ratio calculation has to be rounded, which results in a projection of 1.10%. This has been the running result for more than a month and won’t change in the few days before the reset.
However, there is no way to be sure what formula, if any, the Treasury will use to set the new fixed rate. I think the result will be 1.10%, but this is not certain. This week’s reset could jumble everything. I hope that won’t happen.
The composite rate
The I Bond’s composite rate isn’t calculated by simply adding the variable and fixed rates. The Treasury uses a formula that adjusts for compounding factors of the fixed rate:
[Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]
So if my prediction of a fixed rate of 1.10% and inflation rate of 1.43% are correct, the new composite rate calculation will look like this:
0.011 + (0.0286) + (0.0001573) = 0.0397573
Rounding gives you 0.03976. Turning the decimal number to a percentage gives a composite rate of 3.98%.
I believe this will be the result of the May 1 reset, but I cannot be 100% certain. The U.S. Treasury is currently undergoing an overhaul, including cuts to employees in the Bureau of Fiscal Services, which oversees the savings bond program. From an April 10 article on Govexec.com:
The Treasury Department has begun slashing some offices as part of President Trump’s efforts to reduce the federal workforce, adding several divisions of the Bureau of Fiscal Service to the cut list.
The department is outsourcing the work at the bureau’s Servicing of Savings Bonds, Debt Cross-Servicing Program and Paper Check Printing and Ancillary Services offices. The exact number of employees impacted was not immediately clear but multiple employees familiar with the matter expected it to be hundreds.
An investment quandary
There is still time — but urgently short — to buy an April 2025 I Bond with a fixed rate of 1.20% and a composite rate of 3.11% for six months, before transitioning to a composite rate of 4.08% for the next six months. A purchase in May is likely to earn 3.98% for the first six months, and then an uncertain rate for the next six months.
A higher fixed rate is always a positive, but in this case 10 basis points doesn’t make a huge difference, especially since buying in May gets you a higher starting variable rate. I consider this decision a toss-up, as I wrote in my ‘I Bond Buying Season‘ article.
To purchase an April 2025 I Bond, I highly recommend placing your order on Monday, April 28, to give it time to clear the Treasury process. Purchases on April 29 will also likely be successful, but a purchase on April 30 will be getting the May issue with new rates.
Update: To demonstrate this, on the morning of April 30 I entered a test I Bond order for purchase on April 30 and this is the result:
Purchasing in April results in the most certain result for the investor: A permanent fixed rate of 1.20% and a composite rate of 3.11% for six months and then 4.08% for six months.
If you decide to wait until May, I suggest waiting until late in the month, like around May 28, to make the purchase, since you will earn a full month of interest no matter the date you purchase.
Wait until October?
Once you enter the May to October buying period, you are assured of getting that rate for a full six months, so delaying a purchase until October is fine. Why do that? Because we are seeing high volatility in Treasury yields and could potentially experience a combination of higher inflation, higher budget deficits, a looming debt-limit crisis … and on and on.
- Interest rates could fall by October, but that won’t affect your I Bond purchase. The new composite rate will stay in effect until October 30.
- Or interest rates could soar higher, and then a November purchase may look more appealing, because the fixed rate could rise.
- Or … nothing much will happen to interest rates and you could simply buy in October.
The risks of waiting
The Treasury this week could decide on an oddball, below-expectations fixed rate of 0.50%, with nothing to say about why. (It never explains these decisions.) That is very unlikely to happen, but it could happen.
Or, Treasury could eliminate new purchases of savings bonds entirely, as it did last year with paper I Bonds and payroll-deduction purchases. Again, this is very unlikely.
If things happen as we expect, with the fixed rate set at 1.10%, waiting is a fine move. But there is an air of uncertainty … which will be cleared away on April 30 — or possibly May 1 if Treasury reverts to its old announcement policy.
Of course, I plan to post the rate news on Wednesday (or possibly Thursday) as soon as I get it. The Treasury doesn’t follow a specific schedule for this. It may post the new rates Wednesday morning (because purchases on Wednesday will get the new May rate) but it may not update informational pages until Thursday.
FYI: I focused this article on future rates and didn’t attempt to explain the investing purposes of I Bonds or their intricacies. You can find a lot of that information in these links:
• April 11: Welcome to the I Bond ‘buying season’
• April 3: My I Bond fixed-rate projection just fell to 1.10%
• 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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Follow Tipswatch on X (Twitter) 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.
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Hooray for us 3% fixed rate people. We are getting 5.86% tax deferred. We will probably never see a 3% fixed rate again, or a 2% fixed rate. Funny how that is. Inflation was not particularly high when we were got the 3% fixed rate.
Back when the I Bond fixed rate was at 3.4%, let’s say November 2000 to April 2001, you could also get a 30-year nominal Treasury bond at 5.35%. That was predicting an inflation rate of 1.95%. I Bonds were very attractive. Just keep in mind that you will owe a lot of taxes if you hold to maturity: https://tipswatch.com/2024/02/04/long-time-i-bond-investors-face-a-tax-time-bomb/
Yes, I know all to well about the taxes. Don’t remind me. Ya know “death and taxes”. I don’t like to think about them until I have to.
Anyway, my point was the fixed rate “calculation”, whatever it is or was, has changed a lot over time. I think the decision is made and was made by a bunch of old duffers sitting around in a smoke-filled room, jawing about it for 30 or 40 minutes. And then some little old lady comes in and says “1.1 or 1.2, hurry up.”
Speaking of I Bond taxes. What do you think about using I Bond interest to fund HSA accounts? Between my spouse and I, we’re allowed a 16k contribution annually.
Sure, why not? Are your HSA contributions tax-deductible? I am not sure how that works.
What finally tipped me over (pun intended) to doing all my I-Bond purchases in April was the following chain of reasoning:
April vs May-October is a toss-up per above, so no compelling reason to wait.
If there’s a much higher fixed rate in November, I can get that in a Jan 2026 purchase.
But inversely, there’s a significant chance that the fixed rate would drop a lot, or the I-Bonds might even be stopped entirely in the near future.
I’d rate (pun intended) it a higher chance that something negative happens to I-Bonds given all the chaos, than something positive. I can’t prove it, but it’s a strong feeling.
Thus, conclusion, buy in April. I-Bonds are for the “safety” portion, and that favors acting now. That’s just my perspective, not professional advice.
Under what circumstances has the treasury used 10 year yields instead of 5 year for fixed rate?
I tracked the 10-year for years looking for a strong relationship, but it was never as accurate as the 5-year real yield. An I Bond is technically equivalent to a 5-year TIPS since after 5 years it can be redeemed without penalty. The 5-year year has been a reliable indicator for about a decade.
Just had an interesting–and new–experience, which I’m reporting here in case anyone else has a similar experience and wonders if they’re alone.
My wife and I each have an individual TreasuryDirect account, and also a joint trust account. The purpose of the individual accounts is solely to magnify the amount of I Bonds we can purchase in years when we have the inclination and money to do so, i.e., the individual accounts are not intended to have any ongoing holdings, but instead we buy I Bonds in the individual accounts and then immediately file the TD paperwork to have those bonds transferred to the joint trust account, which is our main estate planning vehicle. Regardless of what we do in the individual accounts in any specific year, we always buy the allowable $10,000 in the joint trust account itself.
I just went online to do that, and TD’s “BuyDirect” function gave me a scolding screen message: “The following error(s) have occurred: Annual limit exceeded. Please edit the purchase amount or edit your pending purchases under ManageDirect, if applicable, and try again.” As an experiment, I changed the intended purchase amount from $10,000 to $5,000, then $1,000, then the minimum of $25. Same message.
In face we have not bought ANYthing in the joint trust account in 2025, nor are there any “pending” or pre-scheduled purchases, so the entire $10,000 should have been allowed. We did, however, buy I Bonds in the individual accounts and had them moved to the joint account, and in 2024 we took advantage of the apparent Gift Box loophole to buy even more I Bonds in the individual accounts by redeeming the joint trust’s older I Bonds with a zero-percent fixed rate, buying new Gift Box bonds in the individual accounts, and then having those transferred back to the joint trust. Because of the typical backlog in human assistance at TreasuryDirect, it was 2024 when we requested that all those new holdings be transferred to the joint trust account, but not until this month when TD finally performed the transfers.
So it looks like somehow TreasuryDirect’s systems are treating all those inbound transfers to the joint trust account as if they somehow applied to the latter’s own $10,000 annual purchase limit, even though our 2025 direct purchases in the trust account have been zero. This has never happened before, but there’s obviously no way to “argue” with TreasuryDirect’s computers. Whatever. We’re glad we made I Bond purchases in the individual accounts this year, because it looks like 2026 will have to arrive before we’re allowed to buy anything in the joint trust again.
Tipswatchchat, my wife and I do exactly the same as you described in your second paragraph. I guess THIS is one time I’m glad that TD is backed up on their paperwork. We sent our paperwork in August 2024 to move the gift bonds to our Trust. I was able to buy our I-Bond for the Trust in January for $10k. It sounds like IF the paperwork had been completed by then, I wouldn’t have been able to buy it. I’ll cross my fingers now to see if the transferred bonds make it to the Trust account.
This more or less confirms my premise that 1) in any year, you can deliver gift-box purchases after you have bought to the maximum the traditional way. But 2) If you deliver gift-box items first, then you will be locked out of making a traditional purchase in that year. This is very weird, but anecdotally it is consistent.
Yes, definitely weird. Because it seems to be the case that although we bought gift box bonds in the individual accounts in 2024, and “delivered” the gifts to each other a week later in 2024, and then filed the TreasuryDirect paperwork to transfer them to the joint trust account, also in 2024, we would have been able to make our usual annual direct purchase in the joint trust account today if TreasuryDirect itself hadn’t taken until mid-April 2025 to complete the transfers of last year’s regular and gift box purchases. Aaargh. Nothing to do but shake one’s head.
And, mindful of TreasuryDirect’s often arcane rules, also to laugh a bit while thinking of this:
“When I use a word,” Humpty Dumpty said in a rather scornful tone, “it means just what I choose it to mean, neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many things.”
“The question is,” said Humpty Dumpty, “which is to be master–that is all.”
I am confused. If you “purchase” an ibond on April 28, but schedule it for April 29 or April 30,
(1) what is the “date of purchase”, as you recite it, that determines when the money is deducted from your bank account?
(2) Is the money deducted from your account on April 30/May 1 respectively?
(3) Is there a risk of missing the 1.2% fixed rate if the SCHEDULED date is 4/30?
Sorry, David, the answer was right there in front of me!!
“To purchase an April 2025 I Bond, I highly recommend placing your order on Monday, April 28, to give it time to clear the Treasury process. Purchases on April 29 will also likely be successful, but a purchase on April 30 will be getting the May issue with new rates.”
Did a little calculation. I know I-Bonds compound semi-annually, but with a schedule, I made a 10,000 investment and assumed the 2.86% rate on May 1 will be the same for 3 years. Schedule did monthly compounding. If you buy in April and get 3.11% for 6 months and 4.08% the rest of the time you end up with $1,245.21 Interest after 3 years. If you bought in May and got 3.98% for the whole time, you would end up with 1,265.98 Interest.
Conclusion, at least for 3 years you would be better off waiting for May and getting the 1.10 fixed rate versus April and the 1.20% fixed rate.
This looks right as a rough estimate. In each of the next years, the 1.2% I Bond would gain at least $10 on the 1.1% version, and after five years it would begin winning. However, these margins are small. That’s why I say it is a toss-up.
How can I learn more about the Gift Box strategy for working around the 10K annual purchase limit for I Bonds?
This is the basic article I recommend: https://thefinancebuff.com/buy-i-bonds-as-gift.html
That is from December 2021 and lays out the rules as we understood them then. Today, things are more complicated, because it appears you can buy gift-box I Bonds and then deliver them in the same year to someone who has already purchased the max. TreasuryDirect has not given us real clarification on this. Read: https://tipswatch.com/2025/01/05/great-mystery-an-i-bond-buying-guide-for-2025/
Thank you!
Once you enter the May to October buying period, you are assured of getting that rate for a full six months, so delaying a purchase until October is fine. Why do that? Because we are seeing high volatility in Treasury yields and could potentially experience a combination of higher inflation, higher budget deficits, a looming debt-limit crisis … and on and on.
Greater volatility and higher inflation are not the only reasons to delay your May-October I bond purchase until October. You can earn more money in the intervening period by buying T-bills earning 4.1%-4.3% and then buy the I bond in October.
This is true, but you are delaying the start of the 1-year clock to be able to withdraw (if you are treating your I-Bonds as an emergency fund), the 5-year clock to withdraw without 3-month interest penalty, and the beginning of interest compounding in the I-Bond. And the T-Bill earnings are taxable this year. Of course if the gift box workaround continues to work the way it did in December, you could just use the T-Bill earnings to buy a small gift box I-Bond in October and deliver it a week later.
On the login page at the Treasury Direct website, there is a yellow box at the top that says the following:
Rate Change Deadline: To receive the current 3.11% rate for I Bonds in TreasuryDirect, you must complete your purchase by 11:59 p.m. Eastern Time on Wednesday, April 30. Learn More
This implies that I would receive the current composite and fixed rate of 3.11%/1.20% if I enter my order on April 30th after the new fixed rate is revealed, as long as my purchase order is received by 11:59 pm. You say definitively that “purchase on April 30 will be getting the May issue with new rates.” Are you sure? I’d like to know with 100% certainty what the new fixed rate will be prior to entering my order.
Of course, I worry that the Treasury Direct website will be down or overloaded on April 30th and I won’t even be able to enter my order!
TreasuryDirect always issues a savings bond the next business day if you make a purchase in real time. So if you buy an I Bond on April 28, it will be issued on the 29th (assuming not a weekend). However, if you schedule a purchase in advance, the bond will be issued and funds withdrawn from your bank account the day it is scheduled.
Last year I scheduled an I Bond purchase for April 30 and October 31 and the bonds were issued during those calendar months. But you have to schedule the purchase at least one business day before the last day of the month for this to work.
Justin provides good advice about scheduling your purchase. However, I’d still suggest making the purchase on the 28th or 29th, to be safe. The money is not withdrawn until the next business day. Many people got burned in the I Bond-mania back in October 2022 by attempting to make last-day purchases. Not worth the risk. (However, I don’t think TreasuryDirect will be overloaded this week. Demand should be reasonable.)
I’ve been on the fence about buying more I Bonds before April 30, after stocking up on the 1.3% fixed rate through tax refunds and gift box purchases last year. But with the fixed rate likely to drop, I decided to buy more at the 1.2% rate and will redeem half of my 0.4% early 2023 I Bonds on May 1. Hopefully I won’t regret this strategy if interest rates suddenly surge higher.
My hunch tells me rates are slightly more likely to rise than fall over the next couple of years. However, there is way too much uncertainty to say this with any level of confidence. Even if real yields rise, it’s also possible the Treasury could suddenly stop issuing new I Bonds, so who knows if we’ll see the fixed rate go much higher from here.