Here is a summary on I bonds:
- You can buy 2 types of US savings bonds: EE Bonds and I Bonds.
- Maximum purchase each calender year per SSN is $10,000 electronic I bonds via treasurydirect.gov + $5,000 in paper I bonds with your tax refund (per return, single or joint).
- Paper can be converted to I bonds.
- Cannot have joint account.
- Can cash in after 1 year, but if you cash before 5 years, you lose 3 months of interest.
- Interest rate = Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate).
- Current (November 2022 through April 2023) fixed rate = 0.40%, will not change while you hold the bond.
- Current Semiannual (1/2 year) inflation rate = 3.24%, it changes every May and November depending on the inflation at the time.
- Current interest rate = 6.89%.
- Semiannually compounding (adding value 2 times a year).
- Anyone (including F-1 students and H1B professional workers) who can open an account on treasurydirect.gov and have an US bank account can buy I Bonds.
- Interest is tax free on state return always.
- Interest is tax free on federal return only if it is used for higher education AND your income is low enough ($100,800 if single, $158,650 if joint for 2022 per form 8815).
- Federal income taxes can be deferred for as long as the bonds are held or until it reaches maturity in 30 years.
I cannot give investment advice, for that, please consult your neighbors.