Treasurydirect 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 TreasuryDirect I Bond Calculator?

The TreasuryDirect I Bond Calculator calculates the current value of Series I savings bonds using the official formula from the U.S. Treasury. I Bonds are inflation-protected securities that earn interest based on both a fixed rate and an inflation rate.

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 compounded semiannually over the holding period.

3. Importance of I Bond Calculation

Details: Accurate I Bond valuation helps investors understand the real return on their inflation-protected investments and make informed decisions about holding or redeeming bonds.

4. Using the Calculator

Tips: Enter purchase amount in USD, fixed annual 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 I Bonds?
A: I Bonds are U.S. government savings bonds that protect against inflation. They earn a combination of a fixed rate and an inflation-adjusted rate.

Q2: How often are inflation rates updated?
A: Inflation rates 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. If redeemed within 5 years, you lose the last 3 months of interest.

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: Federal income tax applies to interest earned, but state and local taxes are exempt. Tax can be deferred until redemption or maturity.