I Bonds: The New 5.51% Rate, Explained

Every May and November, the Treasury resets the rate on Series I savings bonds — the US government's inflation-protected savings bond, sold only through TreasuryDirect. The reset that takes effect on November 1, 2026 is the one savers have been waiting on for two years: the composite rate rises to 5.51%, up from 4.26% on bonds issued in the previous six months. Headlines will lead with the 5.51%, and the 5.51% is real money — but it is also the part of this bond that is guaranteed to change. This page takes the announcement apart: what the two component rates are, which one you actually keep, what the first six months pay in dollars, and who the rules quietly rule out.

What changed on November 1

For any I Bond issued between November 1, 2026 and April 30, 2027, the composite rate for the first six months is 5.51%. The same bond issued a week earlier, in the May-to-October window, started at 4.26%. Nothing about the older bond changes — its own rate keeps updating on its own schedule, as explained below — so the 1.25-point jump applies to new purchases in the new window, not retroactively to bonds already held.

The increase did not come from where most coverage will imply. It came in two parts: inflation, as measured for the semiannual inflation rate, contributes 2.04% per six months (4.08% annualized), and the Treasury raised the fixed rate to 1.40% — the highest fixed rate offered on a new I Bond since November 2006. The inflation part was expected; inflation has been running at roughly that pace. The fixed rate is the news. It is the piece that is set by the Treasury rather than by the price index, the piece that was 0% for long stretches of the past decade, and the piece that — unusually — a buyer gets to keep for the life of the bond.

Two rates wearing one number

An I Bond's composite rate is a sum, and the sum is worth doing by hand once, because everything about this bond follows from it. The Treasury's formula combines the fixed rate with the semiannual inflation rate:

1.40% + (2 × 2.04%) + (1.40% × 2.04% ÷ 100) = 5.51%

Run it: the inflation rate is counted twice, because it applies across a full year even though it is quoted per six months — 2 × 2.04% = 4.08%. The small third term, about 0.03%, exists because the fixed rate also applies to the inflation adjustment itself. Total: 1.40 + 4.08 + 0.03 = 5.51% (5.5086% before rounding). Every I Bond rate you will ever see is built this way, from exactly these two ingredients.

The ingredients behave oppositely. The inflation rate is recalculated every six months from consumer price data and applies to every I Bond in its next six-month period — it is 2.04% now, and it will be something else when the next reset arrives on May 1, 2027. The fixed rate is set when you buy and then never moves: a bond bought in this window carries a 1.40% fixed rate in year one, in year ten, and in year thirty. If inflation later falls to zero, this bond's composite rate falls toward 1.40% — not to zero. If inflation surges again, the composite rises on top of the same 1.40% base. That is the durable story of this reset: not that the bond pays 5.51% today, but that anything it pays for the next 30 years is built on the most generous fixed base offered in twenty years.

What the first six months actually pay

The composite rate is an annual rate, so the first six-month period earns half of it: 5.51% ÷ 2 = 2.755% of your principal. Interest accrues monthly and is added to the bond's value, compounding every six months. Here is the headline rate converted into dollars, next to what the previous window's 4.26% paid over the same span:

The new window pays $6.25 more per $1,000 than the old one over six months — $62.50 more on a full $10,000 purchase. Worth having, but keep it in proportion: the six-month difference between a good window and a mediocre one is small next to the thirty-year difference made by the fixed rate. Two savers who each put in $10,000 — one at a 0% fixed rate in a bad year, one at 1.40% now — hold bonds whose inflation protection is identical; what separates them, every single year, is that 1.40% floor under every future rate.

One timing rule matters for these dollars: the interest shown above is earned across the first six months, but it is not all yours to walk away with early. A bond cannot be redeemed at all in its first 12 months, and a bond redeemed before five years forfeits the most recent three months of interest. At the first period's pace, three months of interest on $1,000 is about $13.78 — on a $1,000 bond cashed at month 12, you would leave roughly that much behind (the exact amount follows the rates in effect at the time). The 5.51% is a rate you earn by staying, not a rate you can grab and leave with.

The rules that come with the rate

• Electronic only, at TreasuryDirect. New I Bonds are bought through the Treasury's own website; there is no bank, broker or app that sells them.
• $25 minimum. You can start with as little as $25, so the worked examples above scale down as easily as up.
• $10,000 per person, per calendar year. That cap is the hard ceiling on how much of this rate any one saver can hold — it is a supplement to a savings plan, not a place to park a house deposit of any size.
• No redemption for 12 months. The money is genuinely locked for the first year, whatever happens.
• A three-month interest penalty before five years. Redeem in years one to five and the most recent three months of interest are deducted.
• A 30-year term. The bond keeps earning interest — always its fixed rate plus the current inflation rate — for up to 30 years.
• Federal tax yes; state and local tax no. Interest is subject to federal income tax, and exempt from state and local income taxes.

Who I Bonds suit — and who they don't

They suit money that has a job dated at least a year away, and ideally five: the second year of an emergency fund, a known expense several years out, cash whose entire purpose is to not lose ground to inflation. For that money, the combination is hard to replicate — a government guarantee, an inflation adjustment written into the rate formula, and now a 1.40% fixed return above inflation, locked for as long as you hold the bond. A saver who bought the maximum in each of the last several windows holds a ladder of bonds, each with its own fixed rate; this window's rung is the best in two decades.

They do not suit money that might be needed inside twelve months — the lock is absolute, with no hardship withdrawal from a bond in its first year — or money you would need in full before five years without handing back a quarter's interest. They do not suit amounts above $10,000 a year, because the cap simply refuses them. And they are not a growth investment: the design goal is to preserve purchasing power with a modest real return on top, which the 1.40% fixed rate delivers and a stock fund, in a good decade, would be expected to beat — with risk the bond never takes. If your cash's job is to grow rather than to keep pace, this is the wrong tool, at any composite rate.

I Bonds vs the savings account

The natural comparison is the high-yield savings account, and our hub on the Fed and your wallet explains why that comparison is lopsided in an interesting way. A savings account rate is a bank's business decision: it is set at the bank's discretion, it can be changed any month, and as the hub shows, it tends to drift down after the Fed cuts and drift up — more slowly — after the Fed raises. Nothing about the rate you signed up for is promised beyond the day it is posted.

An I Bond inverts that arrangement. The inflation part of its rate is not discretionary at all — it is arithmetic, recalculated from published price data on a fixed schedule — and the fixed part is not repriceable by anyone, ever. In exchange, the savings account wins the only contest it enters: access. Savings can be withdrawn today; an I Bond cannot be touched for a year and charges three months of interest for an exit before five years. So the honest framing is not that one beats the other. It is that a savings account rents you a rate that can be changed, while an I Bond sells you a formula that cannot — and charges you flexibility for it.

What happens on May 1, 2027

On May 1, 2027, the Treasury announces the next semiannual inflation rate, and from then on, each bond's composite rate is rebuilt at its next six-month turn using its own fixed rate and the new inflation figure. Bonds bought in this window keep their 1.40% fixed rate through that reset and every reset after it; only the inflation component changes. If inflation cools, the composite on these bonds falls — toward the 1.40% floor, not through it. If inflation heats up, the composite rises above 5.51% without the fixed rate giving anything back. That asymmetry — a floor that cannot fall and a top that cannot be capped — is what the November announcement was really selling, and it is why the fixed rate, not the headline, deserved the headline.