The Treasury announced on May 1, 2026, that Series I savings bonds now carry a 4.26% annualized composite rate, a notable jump that makes the humble I bond competitive again with high-yield savings accounts and short-term CDs. But the number most long-term savers should focus on is smaller and easier to overlook: the 0.90% fixed rate that gets baked into every bond purchased between now and October 31, 2026. That fixed slice stays locked in for the bond’s entire 30-year life, regardless of what inflation does next.
For a saver who puts the maximum $10,000 into electronic I bonds this month, the first six months of interest would total roughly $213, a rough approximation since I bond interest compounds semiannually on the accrued principal rather than paying out on the original face value alone. That alone won’t change anyone’s financial life. What matters is the structural promise underneath: even if consumer prices flatline for years, the bond will never pay less than 0.90% annually. During much of the 2010s, the Treasury set the fixed rate at 0.00% or 0.10%, meaning buyers from that era have bonds with almost no guaranteed real return. Today’s 0.90% floor is a meaningfully better deal.
How the two-part rate actually works
Every I bond earns interest through a formula that combines two pieces. The fixed rate, set once at purchase, never changes. The variable inflation rate, recalculated every May and November, tracks changes in the Consumer Price Index for All Urban Consumers (CPI-U), the non-seasonally adjusted, all-items series published by the Bureau of Labor Statistics. The Treasury plugs both components into a composite rate that determines what bondholders actually earn.
Right now, the fixed rate is 0.90% and the semiannual inflation rate is 1.70%. The composite rate formula on TreasuryDirect combines them into the 4.26% annualized figure. When inflation runs hot, the composite climbs well above the fixed floor. When inflation cools, the composite drops, but it can never fall below the fixed rate itself. That asymmetry is the whole point of the product: you participate in the upside of rising prices without absorbing the full downside when they retreat.
For context, the Treasury set the fixed rate at 1.30% during the November 2023 through April 2024 window, the highest level in years, and the composite rate during that period was 5.27%. Buyers who locked in during that stretch secured both a higher composite and a larger guaranteed baseline than today’s purchasers will get. But 0.90% still represents a real return above zero, which is more than most savings vehicles can promise over a 30-year horizon.
What $10,000 looks like in practice
The annual purchase cap for electronic I bonds is $10,000 per person through TreasuryDirect, with an additional $5,000 available in paper bonds if you direct part of your federal tax refund to that purpose. Married couples filing jointly can each buy $10,000 in electronic bonds, effectively doubling household access to $20,000 per year.
On a $10,000 bond purchased in May or June 2026, the 4.26% composite rate applies for the first six months. After that, the inflation component resets based on CPI-U data that hasn’t been published yet. The fixed 0.90% portion stays. So if inflation moderates and the next variable component drops to, say, 1.00% on a semiannual basis, the new composite would land around 2.90%. If inflation accelerates, the composite rises accordingly. The bond adjusts to price pressures in near-real time while maintaining that permanent floor.
Liquidity is the main trade-off. I bonds cannot be redeemed at all during the first 12 months. Cash out before five years and you forfeit the last three months of interest. On a $10,000 bond earning 4.26%, that penalty would cost roughly $106 in the early going. After five years, there’s no penalty, and the bond can be held for up to 30 years, earning interest the entire time.
How 4.26% stacks up against other safe options
As of late May 2026, top-yielding online high-yield savings accounts are generally offering rates in the low-to-mid 4% range, and one-year CD rates at competitive banks sit in a similar neighborhood. On raw yield alone, the I bond’s composite rate is in the same ballpark.
But the comparison breaks down quickly once you look at the details. A high-yield savings account rate can drop the moment the Federal Reserve cuts its benchmark rate. A one-year CD locks in a rate, but only for 12 months, and the interest is fully taxable at federal, state, and local levels. The I bond’s 4.26% composite will shift after six months, true, but the 0.90% fixed component is permanent. And I bond interest is exempt from state and local income taxes. Federal tax can be deferred until you redeem the bond or it matures, giving you control over when the tax bill hits.
For savers in high-tax states like California, New York, or New Jersey, that state-tax exemption meaningfully improves the after-tax yield. Consider a saver in a combined 9% state and local tax bracket: a CD paying 4.26% effectively yields about 3.88% after state taxes, while the I bond’s 4.26% is untouched at the state level. Over years of compounding, that gap adds up. It doesn’t make I bonds universally superior, but it tilts the math for a large group of savers.
What changes at the next reset
The 4.26% composite rate is guaranteed only for the first six months after purchase. The November 2026 reset will depend on CPI-U readings through September 2026, data that simply doesn’t exist yet. No one, including the Treasury, can tell you what the next composite rate will be.
The fixed-rate component is equally unpredictable going forward. The Treasury announces the number each May and November but has never published the internal methodology behind it. The fixed rate jumped to 1.30% in November 2023, pulled back to 0.90% for the current window, and could move in either direction next time. Buyers should treat it as a policy decision, not a formula output, which is exactly why locking in a known fixed rate while it’s attractive has value.
Who benefits most before October 31
The strongest case for buying now belongs to savers who have already built a solid emergency fund, have a time horizon of at least five years, and want inflation protection that a standard bank product can’t provide. The 0.90% fixed rate isn’t the highest the Treasury has ever offered, but it’s well above the near-zero levels that persisted for most of the past decade. Locking it in means every future inflation adjustment starts from a higher baseline.
The weakest case is for anyone who might need the money within a year, since the 12-month lockup is absolute, or for investors focused purely on maximizing short-term yield. A one-year Treasury bill or a competitive CD might pay a comparable or slightly higher nominal rate right now, but neither adjusts upward if consumer prices surge.
For everyone in between, the decision comes down to how much weight you place on a 30-year guarantee. If you believe inflation will remain stubborn or unpredictable over the coming decades, the I bond’s structure was built precisely for that scenario. If you think inflation is heading durably lower and rates across the board will follow, the 0.90% floor still provides a modest real return, but the opportunity cost of tying up $10,000 may feel steeper. The window runs through October 31, 2026. Once the fixed rate resets after that, today’s 0.90% is gone for new buyers, and there’s no way to get it back.
