The Treasury announces the new Series I Bond rates on Thursday, with the fixed rate and inflation rate components both resetting May 1. This is the first reset of 2026, and it matters most to anyone holding I Bonds bought between October 2022 and April 2024 who has been waiting to see whether the math still favors holding or whether it is time to redeem and roll into something else.
A quick mechanical reminder. An I Bond's total rate is the sum of two pieces. The fixed rate is set at the time of purchase and stays with that bond for its full thirty year life. The inflation rate is reset every six months based on the trailing CPI data and applies to all outstanding I Bonds for the next six month period. So a bond bought in November 2022 has a 0.4 percent fixed rate locked in forever, and that bond's actual rate over each six month window has moved up and down with the inflation reset.
The Treasury's announcement on Thursday will tell us two things. First, the fixed rate for new bonds purchased between May 1 and October 31. Second, the inflation rate that applies to all outstanding bonds for the next six months. The current fixed rate is 1.2 percent, set last November, which is one of the highest fixed rates I Bonds have offered in the last fifteen years. The current inflation rate is 1.69 percent annualized for a combined rate of 2.91 percent on bonds bought between November 2025 and April 2026.
The math on the inflation reset is fairly mechanical. CPI U for September 2025 to March 2026 is the input. Headline CPI for March came in at 2.7 percent year over year, with the six month annualized rate running closer to 3.2 percent. That points to an inflation rate component of approximately 1.55 to 1.65 percent annualized for the May to October window, which is slightly lower than the current 1.69 percent. The fixed rate is harder to predict. Treasury sets it based on real yields on TIPS, and TIPS real yields have come down 30 basis points since November, suggesting the new fixed rate is more likely to be 0.9 to 1.0 percent than the current 1.2 percent.
For new buyers, the decision is whether to lock in by April 30 or wait for the May announcement. Anyone who buys before April 30 gets the current 1.2 percent fixed rate for the life of the bond. Anyone who buys May 1 or later gets the new fixed rate. Given that real yields have come down, the smart move for someone planning to buy this year is to put in a purchase before April 30 to capture the higher fixed rate. The annual purchase limit is $10,000 per person, plus an additional $5,000 in paper bonds via tax refund.
For holders of bonds purchased during the 2022 frenzy, the picture is different. The 9.62 percent rate that drove the 2022 rush has been gone for nearly four years, and the bonds bought during that period have a fixed rate of 0.0 percent. That means the only return on those bonds is the inflation rate component, which is currently 1.69 percent and likely heading lower. Compare that to a 4 to 4.5 percent yield on a one year T-bill, and the math says redeem the 0 percent fixed rate I Bonds and rotate into Treasury bills.
The redemption mechanics matter here. I Bonds must be held one year minimum. Bonds redeemed before year five forfeit the last three months of interest. So a bond bought in October 2022 that is redeemed today loses the last three months of interest. That penalty becomes meaningless once you cross the five year mark, which most 2022 vintage bonds will have done by November 2027.
For holders with the higher fixed rate bonds purchased between November 2023 and April 2024, the calculation is different. Those bonds have a 1.3 percent fixed rate, which makes the total rate today 2.99 percent. That is competitive with cash management options and beats most savings accounts, and there is no good reason to redeem.
The broader point is that I Bonds are a quiet, durable piece of a fixed income allocation. They beat inflation by a fixed margin every year of their life. They are tax deferred at the federal level until redemption and exempt from state and local tax. They cannot lose principal value in nominal terms. The trade off is the $10,000 annual cap and the year-one liquidity restriction.
Anyone planning to use I Bonds as a permanent inflation hedge sleeve in a portfolio should buy max every year through TreasuryDirect and let them stack. The Thursday announcement will tell you whether to put the 2026 purchase in this week or wait until May.