1. What is the Treasury I Bond Calculator?

The Treasury I Bond Calculator estimates the current value of Series I savings bonds based on purchase amount, fixed rate, semiannual inflation rate, and holding period. I Bonds are U.S. government savings bonds that earn interest based on both a fixed rate and an inflation rate.

2. How Does the Calculator Work?

The calculator uses the Treasury I Bond formula:

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 accounts for the composite rate calculation used by Treasury I Bonds, which combines a fixed rate with an inflation-adjusted component that compounds semiannually.

3. Importance of Treasury I Bond Calculation

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

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 Treasury I Bonds?
A: Series I savings bonds are U.S. government bonds that protect against inflation while earning a fixed rate of return.

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 three months' interest if redeemed before five years.

Q4: Are there purchase limits for I Bonds?
A: Yes, individuals can purchase up to $15,000 in electronic I Bonds per calendar year through TreasuryDirect.

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.