I Bond Rate 2026: 4.26% Current Rate, Formula, Limits, Taxes and Buying Guide

Quick answer: The current I Bond composite rate is 4.26% for bonds issued from May 1 through October 31, 2026. It combines a 0.90% fixed rate, which stays with a new bond for its 30-year interest-bearing life, and a 1.67% semiannual inflation rate. The 4.26% figure is annualized and applies for the bond's first six-month earning period—not a guaranteed 2026 calendar-year return.

2026 I Bond rate at a glance

How the 4.26% I Bond rate works

An I Bond has two rate components. The fixed rate is assigned when Treasury issues the bond and never changes for that bond. The inflation rate is based on the non-seasonally adjusted Consumer Price Index for All Urban Consumers and is reset each May 1 and November 1. Treasury combines the two with a formula rather than simply adding rounded percentages.

For the May 2026 reset, Treasury used a 0.90% fixed rate and a 1.67% semiannual inflation rate. The composite formula is the fixed rate plus twice the semiannual inflation rate plus the product of the two rates. After rounding, the result is 4.26% annualized.

The important planning point is that 4.26% does not stay fixed for the next year. A bond bought in September 2026 earns that composite rate for its first six-month earning period. It then moves to the inflation component announced for the next cycle, combined with its permanent 0.90% fixed rate.

Your reset month follows your issue month

Treasury announces new rates in May and November, but an individual bond changes rates every six months based on its issue month. A September bond changes in March and September; an October bond changes in April and October. Buying near the end of the Treasury announcement window does not shorten the first six-month rate period.

I Bonds earn interest from the first day of their issue month. Treasury adds accumulated interest to principal every six months, then applies future rates to the higher value. This semiannual compounding differs from a savings account that visibly credits interest each month, even though Treasury says I Bond interest accrues monthly.

What a 4.26% annualized rate does—and does not—promise

The quoted composite rate is a yearly rate applied for six months. It is useful for comparing the current earning pace, but it is not a promise that a bond will earn 4.26% over its first 12 months. The second six months use a later composite rate, which may be higher or lower.

Treasury does provide a floor: if deflation is severe enough that the formula would produce a negative composite rate, the rate is set to zero. An I Bond's redemption value does not decline because of a negative inflation adjustment. That protection is different from a marketable bond fund, whose share price can fall when yields rise.

To explore a simplified growth scenario, use the Investment Growth Calculator with a conservative changing-rate assumption. Treat the result as planning math, not an exact I Bond value; Treasury's issue-month rules, semiannual rate sequence, rounding and early-redemption penalty control the actual value.

2026 I Bond purchase limit and where to buy

One Social Security Number or Employer Identification Number may generally buy up to $10,000 of electronic I Bonds during a calendar year. The minimum electronic purchase is $25, and Treasury allows amounts above that to the penny. Purchases are made in a TreasuryDirect account, not through a brokerage account.

Since January 1, 2025, I Bonds have been electronic-only. Taxpayers can no longer use a federal income tax refund to buy an additional paper I Bond. Older articles describing a separate $5,000 paper-bond tax-refund route are therefore outdated for 2026.

Gift bonds have special delivery, registration and annual-limit rules. A gift can be bought and held in the giver's gift box, but the recipient's purchase limit applies in the year of delivery. Trust, estate and business registrations can also change ownership and limit analysis. Follow TreasuryDirect instructions rather than opening duplicate personal accounts to try to bypass a limit.

The one-year lockup and three-month penalty

An I Bond is not an emergency-fund substitute during its first year because it generally cannot be redeemed until 12 months after issue. A person who might need the money for rent, a medical bill or a near-term home closing should keep sufficient liquid cash elsewhere.

After 12 months but before five years, redemption forfeits the final three months of interest. TreasuryDirect account values for bonds under five years old already reflect that potential penalty by omitting the latest three months of interest. Once the bond reaches five years, the penalty disappears. If not redeemed, an I Bond earns interest for as long as 30 years.

The penalty is based on the most recent three months, which can be useful when deciding when to redeem after a rate drops. But a timing strategy should account for taxes, the next rate period and where the proceeds will go—not just the desire to avoid three low-rate months.

I Bond taxes in 2026

I Bond interest is subject to federal income tax but exempt from state and local income tax. Owners generally can choose to report interest annually or defer federal reporting until they redeem the bond, it matures, or another taxable disposition occurs. Most individual owners use deferral, but changing from one method can require IRS procedures.

Deferral can postpone taxable income, but it can also concentrate many years of interest into one tax year. A large redemption may affect marginal tax brackets, Medicare income-related premiums or taxation of Social Security benefits. Model the potential federal impact with the Income Tax Calculator and obtain tax advice for a material redemption.

Interest may be excludable from federal income when eligible savings bonds are redeemed to pay qualified higher-education expenses. The education exclusion has ownership, age, filing-status, expense and income requirements. It is not automatic merely because a student is in the family, so review IRS Form 8815 and Publication 550 before relying on it.

I Bonds versus CDs, high-yield savings and Treasury bills

I Bond versus high-yield savings account

A high-yield savings account typically offers daily liquidity and a variable APY. An I Bond locks funds for 12 months but adds inflation-linked rate resets and state/local income-tax exemption. Emergency cash usually favors liquidity; inflation protection for money that can remain untouched may favor I Bonds. See the high-yield savings versus CD guide for the bank-product side of the comparison.

I Bond versus certificate of deposit

A CD can lock a stated APY for a known term, subject to the institution's withdrawal penalty and deposit-insurance limits. An I Bond's future composite rate is unknown because inflation resets. Compare the after-tax return, minimum holding period, early-access terms and whether certainty or inflation linkage matters more.

I Bond versus Treasury bill

A Treasury bill is marketable, has a defined maturity and can be purchased through TreasuryDirect or many brokerages. Its yield is set by the market rather than an inflation formula. I Bonds cannot be sold in a secondary market and must be redeemed with Treasury. Both have federal tax considerations and state/local income-tax advantages, but their liquidity and rate mechanics differ.

Who may find I Bonds useful in 2026?

• Savers with cash they can leave untouched for at least 12 months.
• Households building an inflation-linked portion of a conservative savings ladder.
• Investors who value the permanent 0.90% real-rate component on new bonds.
• Taxpayers in high-income-tax states who benefit from state and local income-tax exemption.
• Long-horizon education savers who can satisfy the separate federal exclusion rules.

I Bonds may be a poor fit for immediate emergency reserves, money needed for a closing within a year, or an investor who requires predictable 12-month income. They also do not replace diversified long-term investing for goals that need growth above inflation. Review bonds and Treasuries for safer yields alongside your broader allocation.

How to buy an I Bond in TreasuryDirect

1. Create or access an individual TreasuryDirect account using accurate identity and bank information.
2. Select the purchase option for Series I savings bonds.
3. Choose an amount of at least $25 without exceeding the applicable 2026 calendar-year limit.
4. Select the funding source and purchase date; confirm the issue month shown by TreasuryDirect.
5. Save the confirmation and record the bond's issue month, fixed rate and first eligible redemption month.

Use TreasuryDirect directly. Be cautious with look-alike advertisements, paid “Treasury account setup” services and search results that request credentials. TreasuryDirect.gov is the official site for electronic U.S. savings bonds.

Common I Bond mistakes

• Treating 4.26% as a guaranteed rate for a full year or for 30 years.
• Using money that may be needed within the 12-month lockup.
• Comparing the six-month annualized rate directly with a fixed CD's full-term return.
• Forgetting the three-month interest penalty before five years.
• Following obsolete advice about buying paper I Bonds with a tax refund.
• Ignoring federal tax concentration when redeeming several old bonds together.
• Assuming every education expense automatically makes the interest tax-free.

Official sources

• TreasuryDirect: May 1, 2026 savings bond rate announcement
• TreasuryDirect: I Bond overview, limits and redemption rules
• TreasuryDirect: current rates, formula and reset schedule
• TreasuryDirect: federal, state and local tax treatment
• IRS Form 8815: education savings bond interest exclusion

Frequently asked questions