I Bonds Rate: 4.26% for May–October 2026
2026-09-27
Short answer: Series I savings bonds issued from May through October 2026 have a 4.26% composite rate, built from a 0.90% fixed rate and a 3.34% annualized inflation component. The six-month inflation change used in the formula is 1.67%. An I bond cannot be redeemed for the first 12 months; if redeemed before five years, the owner gives up the last three months of interest. Electronic I-bond purchases are generally limited to $10,000 per Social Security number or EIN per calendar year.
The May–October 2026 official rate
| Component | Rate |
|---|---|
| Composite I bond rate | 4.26% |
| Fixed rate | 0.90% |
| Annualized inflation component | 3.34% |
| Six-month inflation change used in formula | 1.67% |
| Minimum holding period | 12 months |
| Early-redemption interest penalty before 5 years | last 3 months of interest |
| Electronic purchase limit per calendar year | $10,000 |
| Minimum electronic purchase | $25 |
The fixed rate stays with the bond. The inflation component resets as Treasury updates inflation rates, so the composite rate can change every six months for an existing bond.
The formula
composite rate
= fixed rate
+ (2 × semiannual inflation rate)
+ (fixed rate × semiannual inflation rate)Worked example: rebuild the announced 4.26%
Use the official May 2026 components:
- Fixed rate: 0.90% = 0.009.
- Semiannual inflation rate: 1.67% = 0.0167.
Then:
0.009 + (2 × 0.0167) + (0.009 × 0.0167)
= 0.009 + 0.0334 + 0.0001503
= 0.0425503
= 4.25503%Rounded under Treasury’s rate convention, that is the announced 4.26% composite rate.
I-bond interest is subject to federal income tax but not state or local income tax. Tax timing has separate rules, so the after-tax result depends on the owner.
The mistake people make: treating 4.26% as a permanent APY
The composite rate for an I Bond changes because the inflation component resets every six months, while the fixed component stays with that bond. A buyer who sees 4.26% should therefore not project that exact rate for five or ten years. Liquidity also matters: an I Bond cannot be treated like a checking-account substitute because redemption is unavailable during the first 12 months, and redemption before five years generally gives up the last three months of interest. The tradeoff is different from a savings account or Treasury bill: I Bonds offer inflation-linked mechanics and federal tax treatment, but with stricter access rules. Match the holding period to the cash need before comparing headline yields.
What would flip the answer
- You need the cash inside 12 months. I bonds fail that liquidity requirement because redemption is unavailable during the first year.
- You may redeem before five years. The three-month interest penalty changes the realized return.
- A later six-month inflation rate is different. Your bond’s composite rate will reset even though its fixed component stays the same.
- Another safe-cash option has a better after-tax, after-liquidity result. Compare like-for-like time horizons rather than headline APYs.
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