I Bond Calculator Estimate

Series I Bond Value Formula:

\[ V = P \times \left(1 + \frac{\text{fixed} + 2 \times \text{inflation} + \text{fixed} \times \text{inflation}}{2}\right)^{2 \times y} \]

Purchase Amount (P):

USD

Fixed Annual Rate:

decimal

Semiannual Inflation Rate:

decimal

Years Held (y):

years

Current Value (V):

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1. What is the Series I Bond Calculator?

The Series I Bond Calculator estimates the current value of U.S. Series I savings bonds based on purchase amount, fixed rate, semiannual inflation rate, and holding period. I bonds are government-issued savings bonds that protect against inflation.

2. How Does the Calculator Work?

The calculator uses the Series I Bond value formula:

\[ V = P \times \left(1 + \frac{\text{fixed} + 2 \times \text{inflation} + \text{fixed} \times \text{inflation}}{2}\right)^{2 \times y} \]

Where:

$ V $ — Current value (USD)
$ P $ — Purchase amount (USD)
$ \text{fixed} $ — Fixed annual rate (decimal)
$ \text{inflation} $ — Semiannual inflation rate (decimal)
$ y $ — Years held (years)

Explanation: The formula combines the fixed rate with twice the semiannual inflation rate plus their interaction term, compounded semiannually over the holding period.

3. Importance of I Bond Valuation

Details: Accurate I Bond valuation helps investors track their inflation-protected savings, plan for future expenses, and make informed decisions about holding or redeeming bonds.

4. Using the Calculator

Tips: Enter purchase amount in USD, fixed rate and inflation rate as decimals (e.g., 0.025 for 2.5%), and years held. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What are Series I bonds?
A: Series I savings bonds are U.S. government bonds that earn interest based on a combination of a fixed rate and an inflation rate that adjusts semiannually.

Q2: How often do inflation rates change?
A: Inflation rates for I bonds are adjusted every six months (May and November) based on the Consumer Price Index.

Q3: What is the minimum holding period?
A: I bonds must be held for at least one year, and redeeming within five years results in a penalty of the last three months' interest.

Q4: Are there purchase limits?
A: Yes, the annual purchase limit is $10,000 per Social Security number for electronic bonds, plus $5,000 in paper bonds via tax refund.

Q5: Are I bonds taxable?
A: Federal income tax applies to interest earned, but state and local taxes are exempt. Tax can be deferred until redemption or maturity.