Treasury Direct I Bond Calculator

I Bond Formula:

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

Purchase Amount (P):

USD

Fixed Annual Rate (fixed):

decimal

Semiannual Inflation Rate (inflation):

decimal

Years Held (y):

years

Current Value (V):

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1. What is the Treasury Direct I Bond Calculator?

The Treasury Direct I Bond Calculator calculates the current value of Series I savings bonds based on the purchase amount, fixed annual rate, semiannual inflation rate, and years held. I Bonds are U.S. government savings bonds that protect against inflation.

2. How Does the Calculator Work?

The calculator uses the I Bond formula:

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

Where:

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

Explanation: The formula combines the fixed rate with twice the semiannual inflation rate plus their product, divided by 2, then compounds this rate twice annually over the holding period.

3. Importance of I Bond Calculation

Details: Accurate I Bond valuation helps investors understand the real return on their investment, accounting for both fixed returns and inflation protection over time.

4. Using the Calculator

Tips: Enter purchase amount in USD, fixed annual rate and inflation rate as decimals (e.g., 0.05 for 5%), and years held. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What are I Bonds?
A: I Bonds are U.S. government savings 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 for I Bonds?
A: I Bonds must be held for at least one year, and there's a penalty of 3 months' interest if redeemed before 5 years.

Q4: Are there purchase limits for I Bonds?
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: How are I Bonds taxed?
A: I Bond interest is exempt from state and local taxes, but subject to federal income tax. Tax can be deferred until redemption.