Series I Savings Bonds

Clete Albitz, CFA, CFP®

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About a year ago, in June of 2021, I wrote an article about Series I Savings Bonds. These bonds are issued by the U.S. Treasury and can only be purchased directly at They were yielding 3.54% which was noteworthy at the time. However, with inflation still on the rise, the rate on these bonds has increased further. The current initial interest rate is now 9.62%, the highest level since I Bonds were introduced in 1998.

This rate consists of a fixed rate, which is currently 0%, and a floating inflation rate set twice a year based on changes in the nonseasonally adjusted Consumer Price Index for all Urban Consumer (CPI-U). For current bonds, all the return is due to the inflation rate. The floating inflation rate for bonds issued from May 2022 through October 2022 is 4.81%, which when annualized, equates to the current 9.62% annual rate. This rate will rise if inflation increases further but will decline if inflation decreases. For example, should inflation drop to 0% when the floating rate is reset this November, you will still receive a 4.81% yield in the coming year.

The interest earned on Series I bonds is also tax advantaged. Interest remains taxable at the federal level but is tax free at the state level. Furthermore, you have the choice to report the interest every year or defer the taxes on the interest either until the point of redemption or when the bonds mature after 30 years.

Keep in mind that amount of I bonds that you can purchase is limited to a per person maximum of $10,000 per calendar year. You must also hold I bonds for at least one year, and if you decide to redeem the bonds within five years, you will lose the last three months of interest.

Series I Savings Bonds are an asset class that will provide an inflation adjusted rate of return with no risk of loss. For funds that are not needed for at least one year, they offer a better yield than bank savings, money market funds, or certificates of deposit. If you are interested and need help with the purchase process, please feel free to get in touch.

Clete Albitz


Clete Albitz joined Albitz/Miloe & Associates, Inc. in 2005 and is dedicated to serving clients, specializing in investment portfolio management and retirement income planning. Clete is a CFA® charterholder, CERTIFIED FINANCIAL PLANNER™ (CFP®), and graduated with a degree in Economics from the University of California, San Diego. He enjoys playing baseball, basketball, and coaching Little League. Clete resides in the South Bay with his wife and three children.

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