Everything You Need to Know About I Savings Bonds

Last Updated: March 5, 2019 | by Jackie Brahney | reviewed by Jack Quinn

I Savings Bond

The Series I Savings Bond program began on September 1, 1998.  They are a low-risk savings product, often referred to as an “Inflation Bond.,” or “I Bond.” The main purpose behind I  Bonds was to protect the bond owner/investor from inflation. Even in times of deflation, I Bonds will never lose money.


What is an I Savings Bond?

  • I Bonds are an accrual-type security.
  • I Bonds offer an annual interest rate comprised of a fixed rate AND a semiannual inflation rate.
  • Interest (if applicable) is added to the bond monthly and is paid at redemption (cashing-in).
  • I Bonds are sold at face value; for example, a $100 I Bond will cost $100.
  • I Bonds earn interest from the first day of their issue month.
  • You can redeem them at any time after a 12-month holding period.

How much is a Series I Savings Bond worth?

Need to know the cash-in value of a Series I bond, then use one of our two services. Use the free Savings Bond Calculator to determine your I Savings Bonds value, interest rate, maturity date and to see if now is the best time to cash in to avoid losing interest. Enter an unlimited number of savings bonds. Then save them in an online portfolio to receive a monthly statement about your I Bonds values.

What Amount Of I Bonds Can I Buy?

  • As of January 2012, only electronic Series I Savings Bonds are available for purchase via a TreasuryDirect account.
  • As of December 31, 2011, you can no longer purchase paper I Savings Bonds at a local bank, financial institution or credit union.
  • I Bonds are sold at face value; for example, a $100 I Bond will cost $100.
    Electronic I Bonds can be purchased in a minimum amount of $25, to the penny, in any denomination up to $10,000.
  • Paper I Bonds (ONLY via an application request using a federal tax refund) can be purchased in denominations of $50, $100, $200, $500, $1,000.
  • Maximum purchase:  Electronic I Savings Bonds annually, per calendar year is $10,000 per social security number.
  • Additionally, you can “purchase” up to $5,000.00 in paper Series I Bonds annually, per calendar year using a tax refund using proper government forms.

How Do I Buy Paper I Bonds Using A Tax Refund?

The Treasury Department stopped selling savings bonds through over-the-counter channels. This essentially ended the paper savings bond program. However, there was  one exception. In 2010, a new “Tax Time Bond Program” was announced allowing tax filers to “purchase” paper Series I Savings Bonds with their tax refunds. Check to see if this option is still available. For more information, click here.

To receive a paper Series I Bond(s), when filing your tax return, include IRS Form 8888. Complete Part 2 which informs the IRS that you are requesting to use part, or all, of your tax refund to “purchase” paper Series I Bonds. Series EE Bonds are not available. The minimum amount of bonds is $50, any remaining funds will be delivered to you either by direct deposit or by check.  

You do NOT need to open a TreasuryDirect account to receive paper I Bonds. Follow instructions on IRS Form 8888. Once your tax return has been processed by the IRS, all the paper savings bonds – even those you may have designated to others – will be mailed to you using your  address on file with the IRS.

  • Using a tax refund, the following paper Series I Savings Bond denominations are available for purchase: $50, $100, $200, $500, $1,000.  
  • Paper Series I Savings Bonds are purchased at face value. For example: A face-value $100 paper I bond is purchased for $100.
  • If you request to purchase a total of $250 or less of I Bonds, the Treasury will only use $50 denominations for your order.
  • You can request paper bonds in the names of other individuals to give as gifts.
  • The minimum purchase of a paper I Savings Bond is $50; The maximum purchase of paper I Bonds annually via a tax return, per calendar year, is $5,000.
  • Note: Additionally, you can purchase electronic I Bonds in a TreasuryDirect account with an annual limit of $10,000 per calendar year, per social security number.

How Do I Bonds Earn Interest?

Series I Savings Bond rates are announced every May 1, and November 1. If that day happens to fall on a non-working day, rates are announced on first working day following those dates.  

Interest earning for I Bonds is a combination of two rates:

  • Fixed Rate (of return) – this rate remains the same throughout the life of an I bond


  • Variable Inflation Rate – this rate is calculated twice a year.  “The rate is 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).” –US Treasury Department.
  • Interest is earned on the bond every month, from the first day of their issue month.
  • Interest is compounded semiannually – twice a year,
  • The interest the bond earned from the previous six-month period is added to the bond’s principal value. Then, interest for the next six months is calculated using this adjusted principal/amount.
  • The interest and principal are paid when the bond is redeemed.
  • You can redeem I Bonds at any time after a 12-month holding period.
  • Interest is posted on the 1st of the month.

I Bond Taxes

  • Series I Savings Bond interest is subject to federal income taxes.
  • There is no state or local income taxes.
  • I Bonds are subject to gift, federal estate and excise taxes, and any state estate or inheritance taxes.
  • Taxation can be deferred until the bond is redeemed or reaches final maturity, or other “taxable disposition” – whichever occurs first.
  • Optional: Report interest annually for Federal Income Tax purposes – it could be beneficial based on certain tax brackets and any other income restrictions.  
  • In certain cases, using annual interest reporting method, upon redemption, there may be no federal income taxes due.
  • f reporting annually, keep track of all documents/tax returns.
  • When a bond(s) is redeemed, ALL of the interest earned will reported on a 1099-INT REGARDLESS of any prior interest reporting.
  • The government does not keep track of your annual interest reporting amounts.

Maturity Rules For I Bonds

Important: When any savings bond has reached its final maturity – regardless if it has been cashed in – all of the interest earnings should be reported on ones Federal Income Tax return in that year.

  • I Bonds grow in value with inflation-indexed earnings for up to 30 years.
  • I Bonds reach final maturity (and stop earning interest) 30 years from the month/year of issue.
  • Final maturity interest amount will be posted on the first day of the final maturity month.

How Do I Cash In I Bonds?

  • I Savings Bonds must be held for 1 year before they can be redeemed (see below).
  • A 3-month interest penalty is applied if cashing in an I Bond before it is five years old. (example: if you buy a bond and redeem it 24 months later, you will get back your original investment and 21 months of interest).
  • The value of the bond will be based on the announced rates applied over the initial 21-month (not 24 month) period.
  • To cash in a paper I Bond, bring it to your local participating bank. Call first, some banks do redeem savings bonds or have daily redemption limits.
  • In times of a federal disaster declaration, Savings Bonds may be cashed-in before 1 year.  However, the three-month penalty for cashing-in prior to 5 years is still applicable.

KNOW WHAT YOUR BONDS ARE WORTH BEFORE CASHING IN! Savingsbonds.com has saved investors redeeming bonds hundreds of dollars because of inaccurate bank calculations. Use the complimentary Savings Bond Calculator to find out exactly what your bonds are worth before you cash in.

Follow us

Jackie Brahney

Marketing & Editorial Director at SavingsBonds.com
Jackie Brahney is the Marketing and Editorial Director and most notably, an U.S. Savings Bond Expert for SavingsBonds.com. Since 1991, she has done extensive research on savings bonds and state of the art savings bond valuation systems, and heads the company's public relations and marketing initiatives.
Follow us