The New I Bond Rate Is Out. And It’s Great News.

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Today’s Rate for New I Bond Purchases

I bond rates change twice a year based on the inflation trend of the previous six months—which is why they’re called I bonds. But the rate is actually made up of two parts. One is fixed for the life of your I bond—assigned at the time of your purchase—while the other component is indexed to inflation and adjusts every May and November.

The U.S. Treasury today announced its May 1 rate, unveiling a slightly lower fixed-rate component than the previous period (1.10% vs. 1.20%), but a higher inflation component, coming in at 2.86% (vs. 1.90% six months ago). Combining the two results in a new composite rate of 3.98% for I bonds purchased any time in the six-month period from May 1 to Oct. 31 of this year. (The detailed calculation for the new composite rate is actually [fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)].)

If you buy a new I bond by Oct. 31, you’ll earn 3.98% for your first half year of interest payments. After that, your return will depend on the Nov. 1 rate announcement, which in turn will be determined by future inflation rates. If inflation rises, so too will I bond rates, and vice versa. (See our discussion below about what might be coming for future inflation and I bond rates.)

New and Improved Rates for Existing I Bonds

No matter whether you buy new I bonds tomorrow or already hold I bonds, the same inflation component of 2.86% will be incorporated into your next six-month interest rate. But your return will vary based on when you bought your bond, as that’s when your permanent fixed-rate component is assigned to the bond. Remember: The fixed portion of your rate is just that—it never changes for the life of an individual bond.

At the Nov. 1 rate announcement, the inflation factor was 1.90%. That means today’s new six-month return, based on a rising inflation trend this past half year, will be almost a full percentage point higher than your previous rate (i.e., 2.86% inflation component today minus 1.90% inflation component in November).

To see what the new rate will be on existing I bonds going back to May 2020, look up the issue month of your bond and consult the table below. Then see the next table to find out when your new rate will kick in.