Series I savings bonds, or I bonds, purchased through April 2023 will earn 6.89%, TreasuryDirect® announced Nov. 1, 2022. The rate is the third highest since I bonds were introduced in 1998, but down from the record prior rate of 9.62%.
Inflation-Adjusting Asset and Annual Limits
Starting as low as $25, I bonds are inflation-adjusted U.S. savings bonds that are available electronically on TreasuryDirect.
There is a $10,000 annual purchase limit for individuals, with an additional $5,000 eligible each calendar year as a part of a tax refund using IRS Form 8888. Paper I bonds are sent when they are requested as part of a tax refund. (Read about using tax refunds to buy I bonds in this Wall Street Journal article as well as this IRS document.)
Qualifying businesses and trusts or estates can also buy them, each restricted to $10,000 per year.
I bonds earn interest for up to 30 years. Nearly risk-free as they are backed by the U.S. government, they can be cashed out after 12 months, but 3 months of interest will be lost if one is redeemed before the first 5 years. An I bond’s initial rate is applied to the 6 months after its purchased. Interest is then compounded semiannually.
"Every six months from the bond’s issue date, interest the bond earned in the six previous months is added to the bond’s principal value, creating a new principal value. Interest is then earned on the new principal," TreasuryDirect describes.
How the 6.89% Rate was Adjusted for Inflation
The latest 6.89% rate includes a combination of:
- a fixed rate of 0.40% that remains the same throughout the life of the bond and
- a variable inflation rate that changes two times every year (in May and in November) with the latest calculating to 6.48%
An I bond’s actual rate of interest (its earnings or composite rate) is calculated using the following formula:
[fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)] = Composite rate
As an example, using the data for a new I bond issued from November 2022 through April 2023, the formula shows:
[0.40% + (2 x 3.24%) + (0.40% x 3.24%)] = 6.89%
How an I Bond’s Semiannual Inflation Rate is Determined
An obvious question is how the Treasury established the semiannual inflation rate of 3.24% for the November 2022 to April 2023 period, and then, further, how will it set the semiannual inflation rate for the next May 2023 to October 2023 period.
The inflation component of an I bond’s rate is based on the Consumer Price Index for all Urban Consumers (CPI-U). The CPI is a broad measure of what consumers living in urban U.S. cities pay for a wide range of goods and services — items like food, cars, gas, and healthcare. The U.S. Bureau of Labor Statistics (BLS) publishes the CPI twelve times a year. Each release includes a bevy of data (read their most recent release), including the latest inflation rates.
For I bond purchases in the November 2022 through April 2023 period, the Treasury calculates the change in CPI from March 2022 to September 2022. Looking at the CPI data for those dates, the March 2022 CPI was 287.504 and the September 2022 CPI was 296.808, which calculates to a 3.24% increase.
As for the upcoming May 2023 through October 2023 period, the Treasury will use the two CPI’s from September 2022 (296.808) and March 2023 (not yet known) to calculate the next semiannual inflation rate. It and the Treasury’s fixed rate, if any, will get plugged into the formula to set the I bond’s next earnings or composite rate.
Finding Values of I Bonds
As an I bond’s value is based on interest compounded semi-annually, TreasuryDirect offers tools to check on that value over time.
The latest values of I bonds purchased in TreasuryDirect are provided in the "Current Holdings" section of the buyer’s account. Current values of paper I bonds are available using TreasuryDirect’s Savings Bond Calculator.
TreasuryDirect also offers lookup redemption tables.
Historical Rates for Series I Bonds (May 2015 – April 2023)
The following table shows a historical look at an I bond’s fixed rate along with its initial semiannual inflation rate and initial composite rate based on issue date.
|Date of Issue||Fixed Rate||CPI’s Used to Calculate Semiannual Inflation Rate||Semiannual Inflation Rate||Earnings or Composite Rate|
|November 2022 through April 2023||0.40%||287.504 in March 2022 to 296.808 in September 2022||3.24%||6.89%|
|May 2022 through October 2022||0.00%||274.310 in September 2021 to 287.504 in March 2022||4.81%||9.62%|
|November 2021 through April 2022||0.00%||264.877 in March 2021 to 274.310 in September 2021||3.56%||7.12%|
|May 2021 through October 2021||0.00%||260.280 in September 2020 to 264.877 in March 2021||1.77%||3.54%|
|November 2020 through April 2021||0.00%||258.115 in March 2020 to 260.280 in September 2020||0.84%||1.68%|
|May 2020 through October 2020||0.00%||256.759 in September 2019 to 258.115 in March 2020||0.53%||1.06%|
|November 2019 through April 2020||0.20%||254.202 in March 2019 to 256.759 in September 2019||1.01%||2.22%|
|May 2019 through October 2019||0.50%||252.439 in September 2018 to 254.202 in March 2019||0.70%||1.90%|
|November 2018 through April 2019||0.50%||249.554 in March 2018 to 252.439 in September 2018||1.16%||2.83%|
|May 2018 through October 2018||0.30%||246.819 in September 2017 to 249.554 in March 2018||1.11%||2.52%|
|November 2017 through April 2018||0.10%||243.801 in March 2017 to 246.819 in September 2017||1.24%||2.58%|
|May 2017 through October 2017||0.00%||241.428 in September 2016 to 243.801 in March 2017||0.98%||1.96%|
|November 2016 through April 2017||0.00%||238.132 in March 2016 to 241.428 in September 2016||1.38%||2.76%|
|May 2016 through October 2016||0.10%||237.945 in September 2015 to 238.132 in March 2016||0.08%||0.26%|
|November 2015 through April 2016||0.10%||236.119 in March 2015 to 237.945 in September 2015||0.77%||1.64%|
|May 2015 through October 2015||0.00%||238.031 in September 2014 to 236.119 in March 2015||-0.80%||0.00%|