FAQs
I bonds mature after 30 years, meaning you can continually earn interest on them for 30 years unless you cash them out first. While you can redeem them as early as one year after your initial purchase, cashing in early, specifically within five years, means you forfeit the last three months of interest earned.
Is there a downside to I bond? ›
The cons of investing in I-bonds
There's actually a limit on how much you can invest in I-bonds per year. The annual maximum in purchases is $10,000 worth of electronic I-bonds, although in some cases, you may be able to purchase an additional $5,000 worth of paper I-bonds using your tax refund.
What is the projected I bond rate for May 2024? ›
The May I Bond composite rate is 4.28% (US Treasury) which is 2.14% earned over 6 months. Breaking News: Official Treasury I Bond Rate announced! The May 2024 I Bond Fixed Rate is 1.30%.
Can I buy $10,000 I bond every year? ›
That said, there is a $10,000 limit each year for purchasing them. There are several ways around this limit, though, including using your tax refund, having your spouse purchase bonds as well and using a separate legal entity like a trust.
Are I bonds worth the hassle? ›
I bonds can be a safe immediate-term savings vehicle, especially in inflationary times. I bonds offer benefits such as the security of being backed by the full faith and credit of the U.S. government, state and local tax-exemptions and federal tax exemptions when used to fund educational expenses.
What is a better investment than I bonds? ›
Bottom line. If inflation and investment safety are your chief concerns — TIPS and I-bonds deliver both. TIPS offer greater liquidity and the higher yearly limit allows you to stash far more cash in TIPS than I-bonds. If you're saving for education, I-bonds may be the way to go.
What happens to I bonds if inflation goes down? ›
If inflation runs hotter, the rate can go up. If inflation cools off, the rate can go down. The fixed rate portion of an I Bond remains with the life of the bond. The fixed rate is 1.3% for I Bonds issued from November 2023 through April.
How much is a $100 savings bond worth after 30 years? ›
How to get the most value from your savings bonds
| Face Value | Purchase Amount | 30-Year Value (Purchased May 1990) |
|---|
| $50 Bond | $100 | $207.36 |
| $100 Bond | $200 | $414.72 |
| $500 Bond | $400 | $1,036.80 |
| $1,000 Bond | $800 | $2,073.60 |
How much tax do I owe on my I bonds? Interest on I bonds is exempt from state and local taxes but taxed at the federal level at ordinary income-tax rates.
What day of the month do I bonds pay interest? ›
The interest gets added to the bond's value
I bonds earn interest from the first day of the month you buy them. Twice a year, we add all the interest the bond earned in the previous 6 months to the main (principal) value of the bond. That gives the bond a new value (old value + interest earned).
I savings bonds earn interest monthly. Interest is compounded semiannually, meaning that every 6 months we apply the bond's interest rate to a new principal value. The new principal is the sum of the prior principal and the interest earned in the previous 6 months.
How long should you hold series I bonds? ›
You can cash in an I bond after a year, but if you withdraw sooner than five years, you'll pay a penalty of the last three months' interest. Because your rate changes every six months, it's smart to withdraw when your penalty will be based on a lower rate—and avoid cashing out when you'd be forfeiting a high rate.
Can married couples buy $20,000 in I bonds? ›
Yes, since bond purchase limits are based on a person's Social Security number, a married couple could buy up to $30,000 in I bonds annually. Each spouse could buy $10,000 in electronic I bonds and $5,000 in paper I bonds, assuming their federal tax refund is large enough.
How long does it take to get money from TreasuryDirect? ›
You just bought a security from the U.S. Treasury. Securities are generally issued to your account within two business days of the purchase date for savings bonds or within one week of the auction date for Bills, Notes, Bonds, FRNs, and TIPS.
How to pay taxes on I bonds? ›
How do you report interest on your tax return? The interest on your I bond falls on the same line as other interest income whether you choose to report it every year or all at once at the end of your ownership. Interest the bond earns is reported on a 1099-INT after the bond is cashed or reissued.
Is there a catch with I bonds? ›
The catch is that there's a penalty for cashing in an I bond before five years from its issue date. Fortunately, the penalty is fairly mild. For all I bonds less than five years old, the penalty is equivalent to the last three months' worth of interest. As mentioned, your I bond rate changes every six months.
Are Series I bonds still a good idea? ›
Despite the expected rate decline, I bonds are "still a good deal" for long-term investors, according to Ken Tumin, founder and editor of DepositAccounts.com, which closely tracks these assets.
How long should you keep money in an I bond? ›
You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest. See Cash in (redeem) an EE or I savings bond.
