I Bond Rate 2026: Composite, Fixed, and Inflation Explained

The i bond rate right now is 4.26 percent, built from two very different parts. A Series I savings bond pays a fixed rate the Treasury locks on the day you buy, plus an inflation leg that resets every six months. For bonds issued May 1, 2026 through October 31, 2026, the fixed piece is 0.90 percent, the semiannual inflation rate 1.67 percent, together making that 4.26 percent composite.

The timing matters: the Treasury announces new fixed and inflation rates on May 1 and November 1 every year, and anyone searching the i bond rate around a November announcement is looking at the key number in the inflation-protected savings market. The 4.26 percent composite in force now applies to any I bond bought before October 31, 2026. On November 1, 2026 the Treasury will announce the next set, which will govern I bonds issued through April 2027. The structure stays the same either way: a permanent fixed component plus a semiannual inflation adjustment.

Related reading: Mortgage Applications Drop 5.3% Even as the 30-Year Rate Falls to 7.41%.

How the composite rate is set

Every Series I bond earns interest at a composite rate the Treasury builds from two inputs. The first is the fixed rate, set at issue and never changed. The second is the semiannual inflation rate, derived from the non-seasonally adjusted Consumer Price Index for All Urban Consumers, which includes food and energy, the same CPI behind headline inflation.

The inflation rate is announced on May 1 and November 1, and each announcement sets the inflation leg for the next six months for every I bond ever issued. A bond bought before October 31, 2026 sees today's 1.67 percent semiannual rate in its first period, then steps to the next announcement. The fixed rate is set at purchase and held; the inflation rate is the moving part.

For the broader framework, see our Fed policy coverage.

Related reading: Mortgage Rates Cross 7 Percent Again While Gasoline Holds Above $4.48.

The two do not simply add. The Treasury applies the semiannual inflation rate twice, adds a small interaction term, then rounds to two decimal places. For the current rates, that yields exactly 4.26 percent.

This year's numbers and a $10,000 worked example

Here is the math. The 4.26 percent composite is annual, but I bonds accrue every six months at half the rate, so a new purchase earns 2.13 percent in its first period. On a $10,000 bond, that first half-year adds about $213, bringing the value to roughly $10,213.

Related reading: September CPI inflation rate hits 3.7%, highest since May, on an energy spike.

The second period starts fresh, because the inflation leg resets every six months, so the second half-year gets priced at the next announcement, not at today's 4.26 percent. If the composite somehow held flat for twelve months, the bond would compound to about $10,430, an illustration rather than a promise. What is certain is how the composite splits between its two engines, shown below.

Decompose that 4.26 percent and the fixed piece is small but durable: the 0.90 percent rate contributes roughly 90 basis points of the composite and stays for the bond's 30-year life. The inflation leg contributes the remaining roughly 3.4 points, which moves with the CPI and is why the bond is called inflation-protected. Of a full year's earnings on a $10,000 bond at a flat 4.26 percent, roughly $90 traces to the fixed leg and more like $340 to inflation protection.

Related reading: Two of Three CPI-W Months Are Locked. October 14 Sets Your 2027 COLA.

There are limits on how much you can put in: one person, identified by Social Security number, can buy up to $10,000 of electronic I bonds per calendar year. That annual cap is why savers approaching November 1, 2026 weigh whether to use this year's allowance now or wait.

The fine print: lock, penalty, and taxes

An I bond is not a liquid savings account. You cannot redeem at all during the first 12 months. If you cash in within five years, you forfeit the last three months of interest as a penalty, so the six-month math above shrinks by a quarter if you sell early. After five years you keep every month of interest, and the bond stops earning at 30 years.

Tax treatment is friendlier than most investments. I bond interest is exempt from state and local income taxes, which matters in high-tax states, but it is subject to federal income tax, and you choose whether to report it annually or defer until redemption. There is also an education tax exclusion: proceeds used for qualified higher education expenses, within income limits, may escape federal tax.

I bonds versus a Treasury bill

The natural question is whether a 4.26 percent composite beats a short Treasury bill. As of October 23, 2026, the Treasury's daily yield curve showed a three-month bill at 4.22 percent, a six-month bill at 4.30 percent, and a one-year bill at 4.44 percent. So today's i bond rate roughly matches a six-month bill and trails a one-year bill on nominal yield, but that misses what the I bond does differently.

The bill is a fixed nominal promise: you earn the stated yield, the rate locks only to that maturity, and the money returns in that many weeks with no inflation protection. The I bond's inflation leg adjusts every six months, so if prices accelerate, the bond's earnings rise with the CPI while the bill's locked yield does not. In a falling-inflation world the bill wins outright, and that is the real tradeoff.

There is also a behavioral difference. A bill matures and must be reinvested at whatever rates have done since, and that reinvestment risk works against you when rates are expected to fall. An I bond holds its structure for up to 30 years and simply steps its inflation leg to the next announcement. The costs are the 12-month lock, the early-redemption penalty, and the $10,000 annual cap.

So the view is a question of horizon. For money you can leave untouched and want inflation insurance, the I bond at a locked 0.90 percent real component justifies itself even when bill yields are a touch higher. For money you may need within the year, a Treasury bill offers a known yield, no lock, full liquidity, and no $10,000 ceiling.

Frequently Asked Questions

When do I bond rates change?

Twice a year. The Treasury announces a new semiannual inflation rate and a new fixed rate on May 1 and November 1. The fixed rate applies to bonds bought in the following six months; the inflation rate sets the next earning period for every I bond in existence.

How is the composite rate calculated?

The Treasury doubles the semiannual inflation rate, adds a small interaction term with the fixed rate, then rounds to two decimals. For a 0.90 percent fixed rate and a 1.67 percent semiannual rate, that produces a 4.26 percent composite.

Is the fixed rate locked for the bond's life?

Yes. The fixed rate you are given at purchase never changes for as long as you hold that bond, up to 30 years. Only the inflation leg resets every six months.

What is the penalty for selling within five years?

You lose the last three months of interest if you redeem within five years. There is also a hard 12-month lock at the start, and the bond stops earning at its 30-year maturity.

Are I bonds competitive with a Treasury bill?

At current levels the nominal yields are close: a six-month bill was near 4.30 percent on October 23, 2026, while the I bond composite is 4.26 percent. The I bond adds inflation protection and a 0.90 fixed peg for up to 30 years, but it carries a $10,000 cap, a 12-month lock, and an early-redemption penalty that a bill does not have.

What to watch next

The number that matters next is the November 1, 2026 announcement, which sets the rate for I bonds bought after October 31. If you are deciding between buying now or waiting, the driver is whether you want to bank today's 0.90 percent fixed leg, the only part of the deal the Treasury can move against you because once set on your bond it never changes. A bigger fixed rate then favors waiting; a smaller one favors today.

Sources

U.S. Treasury, TreasuryDirect, I bond interest rates: TreasuryDirect.

U.S. Treasury, TreasuryDirect, Series I savings bonds overview: TreasuryDirect I bonds.

U.S. Treasury, Daily Treasury Rates, October 23, 2026 yield curve: Daily Treasury rates.

U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers, series CUUR0000SA0: BLS CPI-U series.

This content is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Consult a qualified financial advisor before making investment decisions.