I Savings Bonds

Use I Bonds to

save in a low-risk product that helps protect your savings from inflation
supplement your retirement income
give as a gift (Giving Savings Bonds as Gifts)
pay for education (Using Bonds for Education)

What is an I Bond?	A security that earns interest based on combining a fixed rate and an inflation rate. Comparing I Bonds to EE Bonds Comparing I Bonds to TIPS
What interest does an I Bond earn?	A combination of a fixed rate and an inflation rate that can and usually does change twice-a-year. How do I Bonds earn interest?
Is it taxable?	Federal income tax: Yes State and local income tax: No Tax Considerations for EE/E or I Bonds Using the money for higher education may keep you from paying federal income tax on your savings bond interest. Using EE or I Bonds for Education
Paper or electronic?	Electronic
Minimum purchase	Electronic: $25 for a $25 I Bond
Maximum purchase	$10,000 each calendar year for each Social Security Number. You may buy up to $10,000 in electronic I Bonds, and up to $5,000 in paper I Bonds bought with your IRS tax refund.
Available bonds	Electronic: Any amount from $25 to $10,000 to the penny. For example, with electronic bonds, you could buy an I Bond for $50.23.
How long must I keep an I Bond?	I Bonds are meant to be long-term investments. They continue to earn interest for up to 30 years. You can cash them in after one year. But if you cash them in before five years, you lose the last three months of interest. (If you cash in an I Bond after 18 months, you get the first 15 months of interest.)
How do I buy an I Bond?	Electronic: Through your TreasuryDirect account You can arrange to buy electronic bonds in your TreasuryDirect account through payroll direct deposit.

How do I Bonds earn interest?

Interest on an I Bond rates is a combination of two rates:

A fixed rate of return which remains the same throughout the life of the I Bond

and
A variable inflation rate which we calculate twice a year, based on changes in the nonseasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy (CPI-U for March compared with the CPI-U for September of the same year, and then CPI-U for September compared with the CPI-U for March of the following year).

Interest is earned on the bond every month. (However, values displayed by the Savings Bond Calculator for bonds that are less than 5 years old do not include the latest 3 months of interest. These values reflect the interest penalty.)

The interest is compounded semiannually: Every six months, on the 6th and 12th month anniversaries of the issue date, all interest the bond has earned in previous months is in the bond's new principal value on which interest is earned for the next 6 months.

For more details: Calculating Interest Rates on I Bonds

To see specifics for your I Bond: Savings Bond Calculator