Treasury Sets New I Bond Rate at 4.26 Percent — What the Math Tells You

The Treasury Department's Bureau of the Fiscal Service announced new savings bond rates on May 1, 2026. Series I savings bonds issued from May 1 through October 31 will earn a composite annual rate of 4.26 percent. Series EE bonds issued during the same period will earn a fixed 2.40 percent. The new I bond rate is up from 4.03 percent for bonds issued November 2025 through April 2026.

How the composite I bond rate is built

The 4.26 percent composite rate combines two pieces. The first is a fixed rate of 0.90 percent, which is set on May 1 and November 1 and stays with the bond for its entire 30-year life. The second is a variable inflation rate of 3.34 percent (annualized), based on the change in the non-seasonally-adjusted Consumer Price Index over the six months ending in March. The variable piece resets every six months from the bond's issue date.

For an I bond purchased between May 1 and October 31, 2026, the first six months of interest will be calculated at the full 4.26 percent annualized rate. After that, the inflation-rate component will reset based on whatever the CPI looks like at the next reset point, while the 0.90 percent fixed rate continues for the life of the bond.

Why the fixed rate matters more than the headline

The 4.26 percent figure is the number that grabs attention, but for long-term holders the 0.90 percent fixed rate is the more durable feature. The fixed rate represents the real return — the return above inflation — that the bond will deliver as long as you hold it. By comparison, I bonds issued during the much-discussed 9.62 percent period in 2022 carry a 0 percent fixed rate, meaning they will earn nothing once inflation moderates.

A 0.90 percent fixed rate is at the higher end of the range Treasury has set over the past two decades. Bonds issued in 2008 carried fixed rates near 1 percent. For most of the 2010s, fixed rates sat at 0 percent or close to it. Locking in a 0.90 percent real return for 30 years is a defensible move for the inflation-protected slice of a long-term portfolio.

The practical limits

I bonds come with constraints that make them a niche tool rather than a primary cash holding. Each Social Security number can buy a maximum of $10,000 in electronic I bonds per calendar year, plus $5,000 in paper bonds purchased with a tax refund. Bonds must be held for at least 12 months; redeeming between months 12 and 60 forfeits the previous three months of interest. After five years, redemption is penalty-free. Bonds stop earning interest at 30 years.

For comparison, 12-month Treasury bills are currently yielding near 3.7 percent, and high-yield savings accounts at major online banks are paying around 4 percent. The I bond's edge is the long-term inflation protection and the locked-in 0.90 percent real return, not a yield advantage on a one-year horizon.

How to think about whether to buy

I bonds make most sense for investors who already have a fully funded emergency fund in liquid savings, are looking for an inflation-protected component of their long-term portfolio, and have not yet hit the annual $10,000 purchase limit. They are a poor fit for money you might need within the next 12 months, since redemption is not allowed at all during that window.