How Series I Bonds Can Pay 4.30% Interest Rates

I bet you’ve probably felt the pinch of inflation at the grocery store or gas pump these past few months. It’s been reflected in the government figures about inflation too – we’re seeing inflation figures we haven’t seen in decades.

One of the bright parts in all that is that Series I bonds have been in the news too – because they enjoy inflated adjusted interest rates that are seeing record high numbers too.

If you’re wondering how Series I bonds work, I hope this primer fits the bill.

We start with the big news, what the rate is expected to be when adjust in May, followed by how Series I bonds work:

Table of Contents
  1. 💸 May 2023 Interest Rate: 4.30% APY
  2. What Are Series I Bonds?
    1. Tax Considerations
  3. How Are Interest Rates Calculated?
    1. Interest Compounds Semiannually
  4. How To Predict Series I Bond Interest Rates
  5. Historic Series I Bond Interest Rates
  6. When Should You Buy Series I Bonds?

💸 May 2023 Interest Rate: 4.30% APY

For the experts in the room who just want to know the numbers – the composite rate for I bonds issued from May 2023 - October 2023 has officially been announced – it is 4.30% APY!

And this is what we expected since the Treasury gives us the exact equation. 🙂

The September 2022 CPI-U was 296.808 and March 2023 CPI-U was 301.836, for an increase of 1.694%. We can use the rate equation below to guess the interest rate for bonds issued in May 2023 now that Treasury has announced the fixed rate will be 0.90%….

Series I bond will yield 4.30%.

Now that we’re past the numbers update – are you wondering how Series I bonds work? Let’s dive in.

What Are Series I Bonds?

Series I Bonds are bonds issued by the United States Treasury that accrue interest for thirty years. That interest income is taxable at the federal level but they are tax free at the state and local level.

The interest rate is adjusted twice a year and is based, in part, on inflation (more that later).

Each person is allowed to buy up to $10,000 in Series I bonds each year, electronically through If you have a tax refund, you’re also allowed to buy an additional $5,000 of bonds using Form 8888.

Here are step by step instructions on how to buy any Treasury bond or bill.

Tax Considerations

The best part about Series I bonds is that the interest is only taxable at the federal level. Interest is tax free at the state and local level.

While your interest continues to accrue every month, it is only added to the principal every six months. You can elect to report the interest every month but most people, and advises that you do this, report it at the end when you decide to cash in the bond. When you cash in your bond, you’ll get a Form 1099-INT.

If you use the interest to pay for higher education expenses, that interest may be excluded from your taxes too.

Finally, you cannot cash in the bond within a year of purchasing it. If you cash it within five years of purchasing it, you lose the previous three months of interest.

How Are Interest Rates Calculated?

The interest rate of the Series I bond has two components – a fixed rate and an inflated adjusted rate.

The fixed rate is set for the life of the bond when you buy it. The fixed rate is announced in May and November.

The inflation adjusted rate depends on the CPI-U, which is an inflation figure released every month by the U.S. Bureau of Labor Statistics. This is the number every refers to when talking about inflation, it’s the Consumer Price Index for all Urban Consumers (hence the -U).

The inflation adjusted rate is set twice a year, in May and November, based on CPI-U data released in April and October. In April, you get inflation from the prior October through March. With that information, you can determine the inflation adjusted rate.

The well-known equation is:

Composite interest rate = Fixed rate + 2 * Semiannual inflation rate + (Semiannual inflation rate * Fixed rate)

When you buy a bond, you get the inflation adjusted rate at the time of purchase for six months. Then it adjusts to the new rate.

If you purchase a bond in April 2022, you get the rate that was set in November 2021 for six months. Then, you get the rate announced in May 2022 for six months.

One final note on the rate, the inflation rate can be negative but the interest rate on the bonds will be negative. It just gets set to zero.

Interest Compounds Semiannually

The interest on the Series I Bond compounds semiannually, or every six months, based on the issue date of the bond.

So if you buy a bond today, you will earn the interest rate based on how much you purchased. Then, in six months, all that accrued interest is added to the principal of the bond. For the next six months, you earn interest based on the higher amount. And so on.

How To Predict Series I Bond Interest Rates

How are all these experts able to predict the interest rates of future bonds? It’s because the rates are based on inflation and inflation figures are released every month.

You can use the equation above to calculate exactly what the bond will be if you make assumptions about the fixed rate. The fixed rate is announced at the same time and since the fixed rate has been 0.00% for a long long time, many people simply guess that it’ll stay at 0.00%.

If you’re wrong, then you’ll be presently surprised with a higher rate! No one will be upset with that.

Historic Series I Bond Interest Rates has been kind enough to share a list of historic Series I bond interest rates dating back to 1998!

Date the rate was setFixed rateInflation rate
November 1, 20220.40%3.24%
May 1, 20220.00%4.81%
November 1, 20210.00%3.56%
May 1, 20210.00%1.77%
November 1, 20200.00%0.84%
May 1, 20200.00%0.53%
November 1, 20190.20%1.01%
May 1, 20190.50%0.70%
November 1, 20180.50%1.16%
May 1, 20180.30%1.11%
November 1, 20170.10%1.24%
May 1, 20170.00%0.98%
November 1, 20160.00%1.38%
May 1, 20160.10%0.08%
November 1, 20150.10%0.77%
May 1, 20150.00%-0.80%
November 1, 20140.00%0.74%
May 1, 20140.10%0.92%
November 1, 20130.20%0.59%
May 1, 20130.00%0.59%
November 1, 20120.00%0.88%
May 1, 20120.00%1.10%
November 1, 20110.00%1.53%
May 1, 20110.00%2.30%
November 1, 20100.00%0.37%
May 1, 20100.20%0.77%

As you can see, the inflation rate can sometimes be negative. In May 2015, it was -0.80% with a fixed rate of 0.00% – that just means bonds earned nothing for six months. You lost no money.

When Should You Buy Series I Bonds?

Whenever you want!

The best times to buy the bond is near the end of the month because you get “credit” for that entire month. If you buy it on April 20th, you get all the interest you would’ve accrued for the month of April. It’s a minor bit of optimization but worth noting.

We know that the inflation adjusted rate for November 2021 through April 2022 is 3.56%, which means the interest rate for Series I bonds issued for that period will be 7.12%. If you buy a bond in April 2022, you get the 7.12% rate for the next six months. Then you’ll get 9.62% for the following six months. That’s why we’ll be buying a bit before the month runs out.

If you plan to also and don’t yet have a TreasuryDirect account, get on it because it’s an old system and it can take a while!

Other Posts You May Enjoy:

Best Index Funds for Beginners in 2023

Index funds are an excellent choice for all investors. But they're especially valuable for beginners, offering broad exposure to the financial markets while removing the guess work that's involved with picking your own individual stocks. Here are the best index ETFs and mutual funds available today.

How to Buy Treasury Bonds and Bills

Treasury bonds and bills are among the safest investments you can make, and the rates are very attractive right now. But should you buy them from the US Treasury, your bank, an online broker, or inside an investment fund? This article covers everything you need to know about buying Treasury bonds and bills.

How to Buy TikTok Stock 

TikTok is one of the fastest-growing social media platforms in the world, challenging Facebook, Instagram, and other social media giants. So it's only natural that investors would want to get in on the action. Unfortunately, investing in TikTok is not as easy as using the platform.

What are the risks of index investing?

Index funds are the darling of the personal finance world but are they without risk? We look at what to consider when you invest in index funds, where they are appropriate, and what risks you should remember.

About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

Reader Interactions


About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.


    Hello Jim,
    Can I invest $10,000 in I bonds for my grandchildren?
    If I can — show me how.
    Mike Graffeo

  2. Nancy says

    Can you buy 10K for your kids. (Set up accounts in kid’s name and link to your own bank and purchase under their SSN.)?

As Seen In: