I Bonds: Current 4.26% Rate, How It Works, Limits, Taxes and the November 1 Reset

Series I savings bonds bought now pay 4.26%, made up of a 0.90% fixed rate that lasts for the life of the bond plus an inflation rate that resets every six months. That rate applies to I bonds issued from May 1 through October 31, 2026. Treasury sets the next rate on November 1, 2026. This page explains how the rate is built, the $10,000 yearly limit, the 12-month lock-up and 3-month penalty, how I bonds are taxed, and how they compare with T-bills, TIPS and savings accounts at today's yields. Every figure is from TreasuryDirect, the federal regulations or the IRS.

The Short Answer

• Rate now: 4.26% for I bonds issued May 1 to October 31, 2026 (0.90% fixed plus a 1.67% semiannual inflation rate).
• Next change: November 1, 2026. Bonds bought before then keep the 0.90% fixed rate for 30 years.
• Limit: $10,000 a year in electronic I bonds per Social Security number, bought at TreasuryDirect. Gifts count against the recipient's limit, not yours.
• Paper I bonds are gone: since January 1, 2025, I bonds are electronic only, and the IRS has discontinued buying bonds with a tax refund.
• Lock-up: you cannot cash an I bond for 12 months. Cash it before 5 years and you lose the last 3 months of interest.
• Taxes: federal income tax only, and you can defer it until you cash the bond. No state or local income tax.

The Current I Bond Rate

Source: TreasuryDirect, I bonds interest rates and Series I rate chart effective May 1, 2026.

The 1.67% is the change in the consumer price index (CPI-U, not seasonally adjusted) from September 2025 to March 2026. It covers six months, which is why it is doubled in the formula below to make an annual rate.

Two numbers matter differently. The fixed rate is yours for as long as you hold the bond, up to 30 years. The inflation rate changes every six months for every I bond, old or new. A bond bought in 2022 with a 0.00% fixed rate earns only the inflation part today; one bought in late 2023 with a 1.30% fixed rate earns 1.30 points more than that, forever.

How the I Bond Rate Is Calculated

Treasury publishes the formula in its regulations (31 CFR 359.14). In the form TreasuryDirect uses:

Composite rate = fixed rate + (2 × semiannual inflation rate) + (fixed rate × semiannual inflation rate)

For the current period: 0.0090 + (2 × 0.0167) + (0.0090 × 0.0167) = 0.0090 + 0.0334 + 0.00015 = 0.04255, which rounds to 4.26%.

Some details that change what you actually earn:

• Interest starts on the first day of the month you buy. A bond bought on October 28 is treated as issued October 1.
• It compounds every six months. Interest accrues monthly and is added to the bond's value twice a year, so each new period earns on a larger balance.
• Your rate changes on your bond's schedule, not the calendar. A bond issued in October switches to each new rate every April 1 and October 1. One issued in May switches every November 1 and May 1.
• It cannot go below zero. In deflation the inflation component can be negative and pull the composite below the fixed rate, but the regulations say the composite rate "will always be greater than or equal to 0.00%." Your bond's value never falls.

Hypothetical example: $10,000 of I bonds bought in October 2026 earn 4.26% for their first six months, about $213, added to the bond in April 2027. From April the bond earns the rate Treasury announces on November 1, 2026, still including the 0.90% fixed rate. The effect of compounding over many periods is the same idea explained in our guide to compound interest.

What Happens on November 1

On November 1, 2026 Treasury will announce two numbers for I bonds issued November 2026 through April 2027:

1. A new fixed rate. Treasury sets it at its discretion; there is no published formula. It could be higher, lower or the same as 0.90%.
2. A new semiannual inflation rate, the change in CPI-U from March 2026 to September 2026. BLS has not yet published the September figure, so the new rate cannot be known yet, and we do not estimate it here.

November 1, 2026 falls on a Sunday. Under the regulations, Treasury announces on the next business day, but the new rates still take effect from November 1.

Limits, Holding Period and Penalty

Sources: TreasuryDirect (I bonds, How much can I spend, Cashing a bond); 31 CFR 359.6 and 359.7.

The penalty is easier to picture with TreasuryDirect's own example: cash a bond after 18 months and you get the first 15 months of interest. The regulations also say the penalty cannot push the payout below what you paid. For bonds under five years old, the value TreasuryDirect shows already has the last three months of interest taken off.

Ways households legitimately buy more than $10,000:

• Spouses each have their own $10,000 limit.
• Children under 18 have their own limit in a linked account set up by a parent.
• Entities such as a trust or a business with its own account can buy up to the limit separately.
• Gifts count toward the recipient's limit in the year they are delivered. A gift waiting in your account sits in a "gift box" and does not count against you.

How I Bonds Are Taxed

• Federal income tax: yes. You choose between reporting the interest each year or deferring it all until you cash the bond or it stops earning at 30 years. Most people defer. TreasuryDirect posts a Form 1099-INT in your account by January 31 of the year after you cash.
• State and local income tax: no. That makes I bonds worth a little more in high-tax states than a bank account paying the same rate.
• Estate and gift taxes: yes, as with other assets.

The education exclusion. Interest can be entirely federal-tax-free if you use it for qualified higher education costs for yourself, your spouse or a dependent, cash the bonds in the same year you pay the costs, and claim it on IRS Form 8815. The bond owner must have been at least 24 when the bond was issued, so bonds registered in a child's name do not qualify. Married couples cannot use it filing separately. For 2026 the exclusion phases out between modified AGI of $101,800 and $116,800 (single and other filers) and $152,650 and $182,650 (joint), per IRS Rev. Proc. 2025-32.

For retirees, deferral is the useful lever: cashing I bonds in a year when your income is lower, before required IRA withdrawals start, can mean a lower bracket on the accumulated interest. See the 2026 tax brackets for where the lines fall.

How to Buy I Bonds

1. Open a TreasuryDirect account at treasurydirect.gov. The owner needs a Social Security number and must be a U.S. citizen, a U.S. resident, or a civilian employee of the U.S. government.
2. Link a bank account for purchases and redemptions.
3. Choose BuyDirect, then I bonds, and enter an amount from $25 to $10,000.
4. For a gift, you need the recipient's full name, Social Security number and TreasuryDirect account number. The bond must sit in your account at least 5 business days before you can deliver it.

I Bonds vs T-Bills, TIPS and Savings Accounts

Yields below are a snapshot from the Treasury's daily rate tables for October 2, 2026 and the FDIC's national averages as of September 21, 2026. Market yields change daily.

Sources: TreasuryDirect; U.S. Treasury Daily Treasury Bill Rates (coupon equivalent) and Daily Treasury Real Yield Curve, 10/02/2026; FDIC national rates, 9/21/2026.

What the table says:

• Right now, T-bills pay slightly more than I bonds and you can get your money out sooner. They lock in a nominal rate, though, with no protection if inflation jumps. Our comparison of CDs vs Treasury bills covers how to buy them.
• TIPS offer a much higher real (after-inflation) return: 2.69% for five years against the I bond's 0.90% fixed rate. The trade-off is that TIPS are marketable, so their price moves if you sell early, and TreasuryDirect notes that inflation increases in principal can create federal tax each year, even though you do not receive that money until maturity. I bonds let you defer all tax.
• Savings accounts win on flexibility. If you might need the money within a year, an I bond is the wrong place for it. See high-yield savings vs money market accounts for the cash tier.

For an overview of the marketable Treasury lineup, read our guide to Treasury bonds, bills and notes.

I Bond Rate History

Rates for newly issued I bonds over the last six years, from TreasuryDirect's rate history file. The 9.62% in May 2022 was a record for I bonds, driven entirely by inflation, with a 0.00% fixed rate.

Source: TreasuryDirect, Series I Bond rate history (rates announced through May 2026) and Series I earnings rate chart effective May 1, 2026.

Holding an older bond? Its current earnings rate is its own fixed rate plus today's inflation component. For example, a bond issued between November 2023 and April 2024 (fixed 1.30%) earns 4.66% for its current six-month period, according to the TreasuryDirect rate chart.

Who I Bonds Make Sense For

• Retirees protecting spending money for years two to five. Money you will not need for at least a year, but want shielded from inflation, fits the I bond's rules well. Inflation is the risk that does the most damage to fixed incomes; we explain why in how inflation affects investment returns.
• Savers building a second tier behind an emergency fund. Keep the first months of expenses in a bank account and put the next layer in I bonds after the 12-month lock-up has passed. Our emergency fund calculator sizes the first tier.
• Residents of high-tax states, since the interest is free of state and local income tax.
• Parents saving for college who expect income under the Form 8815 limits, keeping the bonds in their own names.

I bonds fit less well for large sums (the $10,000 limit makes them a small slice for most portfolios), for money you may need within a year, or if you want the highest real return, where TIPS currently pay more.

Sources & Methodology

• TreasuryDirect, I bonds interest rates: the 4.26% current rate, 0.90% fixed rate, 1.67% semiannual inflation rate and the formula.
• TreasuryDirect, Series I earnings rate chart (effective May 1, 2026) and Series I rate history file: the history table and the rates on older bonds.
• TreasuryDirect, I bonds, How much can I spend, Buying savings bonds, Giving savings bonds as gifts and Tax information for EE and I bonds: limits, holding period, penalty, electronic-only status, gifting and taxes.
• 31 CFR Part 359: the governing regulations for I bonds, including the composite rate formula (359.14), zero floor (359.13), announcement dates (359.9), CPI months (359.11), redemption (359.6) and penalty (359.7).
• IRS Rev. Proc. 2025-32, section 4.17: the 2026 education exclusion phase-out ranges. IRS Form 8815: how the exclusion is claimed.
• IRS Form 8888: the notice that buying savings bonds with a tax refund has been discontinued.
• U.S. Treasury, Daily Treasury Bill Rates and Daily Treasury Real Yield Curve: T-bill and TIPS yields for October 2, 2026. TreasuryDirect, TIPS for TIPS terms and taxes.
• FDIC, National Rates and Rate Caps: the 0.37% national average savings rate as of September 21, 2026.

Method notes. The current rate was cross-checked across three TreasuryDirect sources (the rates page, the rate chart PDF and the history spreadsheet). The 4.66% example for a November 2023 bond is read from the rate chart. The $213 example is our arithmetic; TreasuryDirect values bonds in $25 units, so cents can differ. T-bill yields are coupon-equivalent. This page will be updated when Treasury announces the November 2026 rates.

This article is for general information and is not financial or tax advice. Rates and rules are from TreasuryDirect, the Code of Federal Regulations, the U.S. Treasury and the IRS, checked against the primary sources on 2026-10-04. I bond rates change every May 1 and November 1 and market yields change daily, so confirm current figures at TreasuryDirect before buying.

FAQ

What is the current I bond rate?
4.26% for I bonds issued from May 1 through October 31, 2026. That includes a 0.90% fixed rate, which stays with the bond for its 30-year life, and a 1.67% semiannual inflation rate.

When does the I bond rate change next?
November 1, 2026. Treasury announces a new fixed rate and inflation rate for bonds issued November 2026 through April 2027. Because November 1 is a Sunday this year, the announcement comes on the next business day, effective November 1.

How much can I invest in I bonds per year?
$10,000 in electronic I bonds per Social Security number per calendar year. Spouses, children and entities each have their own limit, and gift bonds count toward the recipient's limit.

Can I still buy paper I bonds with my tax refund?
No. I bonds have been electronic only since January 1, 2025, and the IRS has discontinued the program that let you buy savings bonds, paper or electronic, with your refund.

Can I cash I bonds early?
Not in the first 12 months. After that you can cash them at any time, but before 5 years you give up the last 3 months of interest.

Are I bonds taxable?
The interest is subject to federal income tax but exempt from state and local income tax. You can defer the federal tax until you cash the bond or it reaches 30 years, and it can be excluded entirely if used for qualified higher education under the Form 8815 rules.

Can an I bond lose money?
No. The composite rate cannot fall below zero, so the bond's value cannot drop. The only cost of cashing early is the 3-month interest penalty, which cannot reduce the payout below what you paid.

Are I bonds better than T-bills right now?
On October 2, 2026, 26-week and 52-week T-bills yielded 4.29% and 4.46%, slightly above the I bond's 4.26%, with no lock-up. I bonds add inflation protection and tax deferral. Which matters more depends on how long you can leave the money and how much you worry about inflation.

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"I Bonds: Current 4.26% Rate, How It Works, Limits, Taxes and the November 1 Reset." Wealthy Pot, 2026. https://wealthypot.com/i-bonds/