I bonds — TreasuryDirect (2024)

FAQs

Can I buy $10,000 worth of I bonds every year? ›

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 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.

The composite rate for I bonds issued from May 2024 through October 2024 is 4.28%.

You can buy I bonds in electronic form, at face value, after you open a TreasuryDirect® account. Purchase prices start at $25, and you can buy in any amount above that up to $10,000 per person, per calendar year. You also can buy an I bond in paper form, through the Tax Time Purchase Program.

Note that I bonds must be held for at least 12 months before they can be sold. If you hold them for less than five years, you will forfeit three months of interest. You can buy more in TIPS, and their liquidity is an attractive option for some investors. Plus, TIPS pay a fixed interest rate semiannually.

The composite rate for I bonds issued from May 1, 2024, through Oct. 31, 2024, is a combination of a fixed rate of 1.3 percent and an inflation rate of 2.96 percent.

You can count on a Series I bond to hold its value; that is, the bond's redemption value will not decline.

Interest earned on I bonds is exempt from state and local tax but subject to federal tax. The interest is taxed in the year the bond is redeemed or reaches maturity, whichever comes first.

Since January 1, 2012, paper savings bonds are no longer available at banks or other financial institutions. Paper Series I bonds can still be bought with IRS tax refunds, but Series EE bonds are available only in electronic form.

How long should you hold series I bonds? ›

Can I cash it in before 30 years? 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.

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).

We put a 1099 into your TreasuryDirect account if: You cash a savings bond in TreasuryDirect. (We don't provide a 1099 if you only buy or hold a savings bond.) You hold a marketable security in TreasuryDirect and the security earns interest.

Normally, you're limited to purchasing $10,000 per person on electronic Series I bonds per year. However, the government allows those with a federal tax refund to invest up to $5,000 of that refund into paper I bonds.

In a calendar year, one Social Security Number or one Employer Identification Number may buy: up to $10,000 in electronic I bonds, and. up to $5,000 in paper I bonds (with your tax refund)

That said, there is a $10,000 limit each year for purchasing them. There are a number of 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.

SERIES I BONDS ISSUED SEPTEMBER 1998 AND THEREAFTER All Series I bonds reach final maturity 30 years from issue. Series I savings bonds earn interest through application of a composite rate.