If you are looking for investments with high interest rates, inflation protection and government support safety, Series I bonds can be an attractive addition to your portfolio. The Ministry of Finance has announced that I will pay 3.98% for six months on bonds issued between May 1, 2025 and October 31, 2025. The new rate includes a fixed portion of 1.1%. This is up from the previous percentage of 3.11% of bonds purchased between November 2024 and April 2025.
Interest rates on these bonds rise as inflation rises, ensuring that payments will respond to rising prices and will not lose purchasing power over time. Of course, if inflation drops, the rates for these bonds also drop. In contrast to Series I bonds, the current interest rate for Series EE bonds is 2.7%.
This inflation protection for I bonds has surged to its highest level in about 40 years, causing a stir among savers in recent years. That level of inflation led to the rate of I bonds issued between May and October 2022 to 9.62%, followed by 6.89% of bonds issued between November 2022 and April 2023.
Below are how you can buy Series I bonds, how investments infiltrated in these inflation, and what you need to be aware of. Additionally, we reveal lesser known tips to help you invest more in these special bonds.
How to purchase Series I Bonds
1. Determine if you are eligible
The US Treasury Department doesn’t just buy my bonds, so I need to check if I’m eligible to buy them.
It must be one of the following:
- Even if you live abroad, you can still be a US citizen
- US residents
- Regardless of where you live, a private employee of the US government
Additionally, trusts and real estate may purchase I bonds in some cases, but companies, partnerships, and other organizations may not.
2. Set up a TreasuryDirect account
If you are qualified, you can proceed with opening a TreasuryDirect account. This account allows you to purchase bonds (including series EE bonds), as well as Treasury bills, Treasury bonds, Treasury debts, and government tips.
For individuals who set up a TreasuryDirect account, they need a taxpayer identification number (such as a Social Security number), a US record address, a checked or savings account, an email address, and a web browser that supports 128-bit encryption.
Enter your information at the prompt and establish an account in just a few minutes. Set up a password and three security questions to protect your account.
Children under the age of 18 cannot directly set up a Treasury account, but parents or other adult custodians may open accounts of minors linked to themselves.
3. I’ll place an order
After you set up an account, TreasuryDirect will send you your account number by email. You can use this to log in to your account. Once you’ve entered your account, you can select “buydirect” and then select the Series I bond and the amount you want to purchase. Next, select the bank account you want to use and the date you want to purchase. You can also purchase it repeatedly.
For electronic bonds over $25, you can purchase any increment up to cents. This means you can buy bonds for $76.53 if you wish.
Please confirm your purchase and submit your order. Once your order is complete, your TreasuryDirect account will hold your bonds and can be viewed at any time.
If you are using a federal tax refund to purchase a paper I bond, you must complete Form 8888 and file your tax return when you file. Paper bonds are sold in increments of $50, $100, $200, $500 and $1,000. The bond will be mailed after the IRS processes the returns.
What are Series I Bonds and how do they work?
Series I bonds are US federal government-issued bonds that earn interest in two ways. The rate of fluctuation adjusted twice a year based on fixed interest rates and inflation. As inflation rises or falls, its rate of volatility changes to offset it, protecting the purchasing power of money.
The bond will earn interest for 30 years or until you earn it. And it is supported by the US government and has historically been one of the world’s finest credit risks.
I will earn general interest rates for the first six months of holding bonds at that point. For example, I bonds issued between May and October 2025 earn interest at 3.98% per year. That is, even if you buy bonds in April, you will still earn that fee for six months. The bond will then adapt to the new rates announced in November.
Bonds cannot be cashed out for the first 12 months they have been held. If you cash out your bond at least five years ago, you will be paying an interest penalty for the past three months. However, special regulations may apply if a natural disaster is affected.
Series I bonds also offer several tax benefits. Interest on bonds is exempt from state and local taxes, but you will still have to pay federal taxes on your profits. Additionally, paying for higher education using interest may help you avoid paying federal taxes on interest income.
Unfortunately, Series I bonds cannot be purchased through tax accounts such as IRAs.
How much can I invest in Series I bonds?
In any calendar year, an individual can earn the following amount of Series I bonds:
- $10,000 in e-I bonds from TreasuryDirect
- With $5,000 paper I will bond with your federal income tax refund
This means that individuals can purchase up to $15,000 in I bonds each year. Assume that the tax refund is large enough to make the most of the paper bond portion. Many savers don’t know that federal tax returns get special help from I bonds, so if you want to take advantage of this bonus allocation, it may make sense to withhold more money from your paycheck.
Any bonds you buy for yourself or bonds purchased for you are counted towards the limit. There is an exception to this rule in the case of bonds transferred to you because the original owner of the bond has died. In this case, the amount will not be counted against the limit.
It is also important to note that these restrictions apply to recipients of I-debt. Thus, an individual can maximize its limits as a gift to multiple Treasury account holders, including children. For gifts, the same annual limit applies to recipients. Electronic bonds cost $10,000 and paper bonds purchased through federal tax returns $5,000.
Therefore, while an individual may be able to purchase as many as $15,000 I-bonds in a year, a family of four can acquire up to $60,000 I-bonds in a calendar year. However, families will need a sudden refund check to provide that potential $20,000 paper bond.
(That said, there’s no way to invest more, even though it requires some legwork.)
Conclusion
As Americans are fighting permanent inflation, savers are looking for ways to protect themselves from rising prices. Series I bonds, which are rounded out by annual limits for savers, help them do that. Additionally, at least in the near future, we will be able to get the security of government-supported assets and relatively high interest rates.
– Bank Rate Logan Jacoby I contributed to updating this story.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. Furthermore, investors recommend that past investment products performance is not a guarantee of future price increases.