Key points
- Series I savings bonds can be a hedge against inflation.
- The current composite rate for I bonds is 4.28%.
- You can buy up to $10,000 in electronic I bonds and $5,000 in paper I bonds annually.
Series I savings bonds are an attractive investment option for those seeking protection against inflation.
With a yield of 4.28%, they offer a stable return adjusted to reflect changes in inflation. That means if prices rise, the yield does too. This feature makes Series I bonds a popular choice among investors.
There are no limits on how often you can purchase I bonds. But there are limits on the dollar amount you can invest each year. We’ll explain those limits and answer common questions to help you see if I bonds are right for you.
What are I bonds?
An I bond is an investment issued by the U.S. government. It pays interest based on a composite rate calculated using a fixed rate and an inflation rate.
The current fixed rate is 1.30%. The current inflation rate is 1.48%. The flat and inflation-linked rates are adjusted twice a year. The current composite rate is 4.28%.
If you purchase an I bond between May 1, 2024, and Oct. 31, 2024, you’ll get an annualized 4.28% return for the first six months. Your bonds will grow in value for up to 30 years.
But remember, you can’t turn around and sell your I bonds after six months. The earliest you can redeem your I bonds is 12 months after purchase. That is, unless you live in an area affected by a natural disaster. And if you sell I bonds in less than five years, you’ll lose the last three months’ interest.
How often can you buy I bonds?
OK, now that we’ve defined I bonds, how often can you buy them?
There’s no limit on how often you can buy I bonds. But there’s a limit on how much a given Social Security number can purchase annually. Here are the annual limits:
- Up to $10,000 in electronic I bonds.
- Up to $5,000 in paper I bonds with a tax refund.
These limits are for the recipient of the I bonds, not the giver. If you’re named the owner of the bonds, then the amount goes toward your limit. But if you’re the “second named owner” on the bond, the limit goes to the person named first.
While there’s a limit on how much you can receive (or buy) in I bonds per year, there’s no limit on the total amount you can own.
How much can I buy?
I bonds can be purchased digitally and in the old-fashioned paper format. But the amounts you can buy vary, said Michael Schulman, chief investment officer at Running Point Capital Advisors.
“The electronic form of I bonds can be purchased at any amount from $25 to $10,000,” he said. “However, their paper counterpart is a little different. Paper I bonds are only available in multiples of $50.”
There are also limits on how many I bonds you can buy each year. Individual purchase limits for I bonds are $15,000 per calendar year — $10,000 worth of electronic I bonds and $5,000 worth of paper I bonds. Paper I bonds must be purchased using your federal tax refund.
So if you buy $5,000 worth of paper I bonds with your tax refund in the spring, you can buy up to $10,000 worth of electronic I bonds throughout the calendar year.
Giving I bonds as gifts
You can give and receive I bonds as gifts. They’re still subject to annual limits, though.
Suppose someone gifts you $10,000 worth of electronic bonds in the calendar year and you want to buy more for yourself. Your only option would be buying $5,000 worth of paper bonds with your federal income tax refund. You’d need to wait until the following calendar year to buy more electronic bonds.
The annual limits are based on the Social Security number of the first person named on the bond registration. So you may be able to give gifts up to the annual limit and still purchase bonds for yourself.
If you buy electronic I bonds as gifts, your recipient will need a TreasuryDirect account. Parents can set up minor linked accounts for their children to receive gifted bonds. The government will send paper bonds purchased with a tax return to you for distribution.
How and where to buy I bonds
Those interested in buying I bonds have two options:
- You can purchase I bonds electronically for up to $10,000 through the TreasuryDirect website. Your electronic bonds will be accessible online through your TreasuryDirect account.
- You can purchase paper I bonds in $50 increments for up to $5,000 with your federal tax return. To do so, you’ll need to file IRS Form 8888 with your taxes. The IRS will send your paper bonds in the mail a few weeks later. According to the IRS, “The issuance of the savings bonds could take up to three weeks; taxpayers will generally receive their savings bonds after they have received the remainder of their tax refund.”
When you should consider buying I bonds
You can buy I bonds anytime. From May 1, 2024, to Oct. 31, 2024, I bonds pay 4.28%. Remember, that rate will change semiannually based on inflation.
“I bonds offer an opportunity to lock down a certain attractive yield in an uncertain market,” said Riley Adams, a certified public accountant and founder of Young and the Invested, which provides financial literacy targeted at younger generations. “In the market tumult we’re seeing, anything with a guaranteed positive return can be a valuable asset to hold.”
The I bond rate at the time of purchase remains in effect for six months. Then, rates adjust semiannually for the periods of May 1 to Oct. 31 and Nov. 1 to April 30. So if you buy I bonds on May 1, 2024, for example, the 4.28% rate applies through Oct. 31, 2024.
Some people evaluate whether to buy I bonds at the end of each semiannual period. If it looks like inflation will increase the bond rate, they may wait to make their purchase. If rates are expected to fall, they’ll purchase additional bonds prior to the interest rate adjustment. If you do this, be sure to initiate your purchase early enough that it will finish processing before the rate change.
Frequently asked questions (FAQs)
Yes, you can purchase up to $10,000 in electronic I bonds each calendar year. You can also buy an additional $5,000 in paper I bonds using your federal tax return.
The $10,000 limit on electronic I bond purchases is based on an individual’s Social Security number or employer identification number. That means you can buy more than $10,000 in I bonds each year as gifts. But you can’t give more than $10,000 in electronic I bonds to one person.
Yes. I bond purchase limits are based on a person’s Social Security number. So a married couple can buy up to $30,000 in I bonds annually. Each spouse can buy $10,000 in electronic I bonds and $5,000 in paper I bonds, assuming their federal tax refund is large enough.
If you have electronic I bonds, they can be redeemed within your TreasuryDirect account. You can cash any amount of $25 or more to the penny. But you must leave at least $25 in your account if you cash only part of what a bond is worth.
If you have paper I bonds, you can cash them at a bank or send them to the government for redemption. Paper bonds must be redeemed in full.
You must keep your money in an I bond for at least 12 months before it’s eligible for redemption. After that, you can redeem anytime. But it’s best to wait at least five years. If you cash in a bond before then, you’ll lose the last three months’ interest.
Bonds will continue to earn interest for 30 years. There’s no financial benefit to holding a bond longer.
