Should You Buy I-Bonds in 2025? Expert Insights, Rates & Action Plan

TL;DR: If you want guaranteed inflation protection with zero price volatility, plan to hold at least 5 years, and value state-tax-free, tax-deferred interest, buying I-Bonds at today’s terms can make sense—especially as a long-term “real return anchor.” If you need liquidity within 12–24 months or you’re chasing a higher real yield right now, high-yield CDs or TIPS likely beat I-Bonds today. 🧭

What’s new in 2025 (and why it matters)

• Today’s new-purchase rate (May 1 – Oct 31, 2025): 3.98% composite, built from a 1.10% fixed rate (locked for 30 years) + a variable inflation component that resets every 6 months from your purchase date. TreasuryDirect

• How the variable rate is set: formula ≈ fixed + (2 × semiannual CPI) + (fixed × semiannual CPI). Translation: the bond’s long-run purchasing-power protection comes from the CPI piece, while the fixed rate is your long-run “real” kicker. TreasuryDirect

• You can no longer buy paper I-Bonds via your tax refund (the extra $5k path ended Jan 1, 2025). Electronic purchases remain available at TreasuryDirect. TreasuryDirect

• Annual purchase limit: $10,000 per calendar year per SSN/EIN (each person or legal entity can buy their own $10k). TreasuryDirect+1

• Gifting still works (smart for multi-year planning): gifts sit in your TreasuryDirect “gift box,” don’t hit the recipient’s annual limit until delivered, and can be held indefinitely before delivery. TreasuryDirect+1

Is 3.98% “good” right now?

Context matters. Here’s how I-Bonds stack up today against common “safe” choices:

Sources for snapshot rates: I-Bonds/TreasuryDirect; Bank/aggregator listings for HYSA & CDs; 10-yr TIPS real yield from FRED. TreasuryDirectNerdWalletBankrateFRED

Takeaway: On a one-year horizon, many CDs/HYSAs currently edge out new I-Bonds on headline yield. But for multi-year, inflation-hedged, capital-stable savings—especially in taxable accounts—I-Bonds keep their appeal because the 1.10% fixed stacks on top of whatever inflation does, and interest is state-tax-free and deferrable at the federal level. TreasuryDirectKiplinger

The math you actually care about (with the 3-month penalty reality)

New I-Bonds pay 3.98% for your first six months (≈ 1.99% over that half-year). After that, your next six months depends on future CPI—unknown today. If you redeem at 12 months, you lose the last 3 months of interest.

Approximate 12-month, after-penalty outcomes on $10,000 (examples):

These show why I-Bonds aren’t a 12-month yield hack. They shine over 5+ years (no penalty) as an inflation-proof savings sleeve with a fixed real tailwind (1.10%) that lasts up to 30 years. TreasuryDirect

Who should buy now (and who shouldn’t)

✅ Strong buy case (consider maxing your $10k/yr)

• You want inflation protection with no mark-to-market risk and will hold ≥5 years.

• You live in a high state-tax state and value state/local tax exemption on interest. Kiplinger

• You’re building a permanent, safe “real return” base for retirement or big future goals, and you appreciate locking a 1.10% fixed for decades. TreasuryDirect

• You already used CDs/HYSAs for near-term cash and want a diversifier that can’t drop in price like bond funds.

⚠️ Probably don’t buy (or keep it small)

• You might need the money inside 12 months (you simply can’t redeem). TreasuryDirect

• You’re optimizing near-term yield: top 1-yr CDs/HYSAs are competitive or higher today without a penalty or uncertainty in the second 6 months. BankrateNerdWallet

• You want the highest long-run real yield and are comfortable with price swings—TIPS at ~1.8% real may be better for that goal. FRED

Practical playbook (2025)

1. Decide your horizon. If it’s <2 years, CDs/HYSAs likely win. If it’s 5–30 years, I-Bonds are compelling ballast.

2. Set your target: Many households aim to max $10k per adult annually; add a separate $10k per trust or business EIN where legitimate (entity accounts allowed). TreasuryDirect+1

3. Open/verify TreasuryDirect (free). Choose registration carefully and add a POD beneficiary. TreasuryDirect

4. Buy in chunks (e.g., monthly) to stagger your 6-month reset dates—handy if inflation jumps later.

5. Consider the gift box to pre-buy future years’ bonds for a spouse/kids; deliver in later years so you don’t breach annual limits. (Gifts count when delivered). TreasuryDirect

6. Remember taxes: Interest is federally taxable (when redeemed/matured) but state/local tax-free; certain education uses can exclude interest if you qualify (Form 8815 rules). Kiplinger

7. Mark your calendar: Your personal reset happens every six months from your issue month; reassess then. Next new-buyer rate reset is Nov 1, 2025. TreasuryDirect

I-Bonds vs. EE Bonds vs. TIPS (quick nuance)

• I-Bonds: Inflation-linked composite, no market price risk, 12-mo lock, 3-mo penalty <5 yrs, $10k/yr cap per SSN/EIN. Best as an inflation-proof, capital-stable core. TreasuryDirect+1

• EE Bonds: Fixed rate (2.70%) and a 20-year value-doubles guarantee—nice for a known date certain, but no inflation linkage. TreasuryDirect

• TIPS: Tradable, real yield ~1.8% today, but prices swing with interest rates; great for max real return, not for those who can’t tolerate volatility. FRED

  
  

Decision matrix (use this to act)

Common mistakes to avoid 🙅‍♂️

• Buying for a 1-year “arb.” The 3-month penalty usually sinks the 12-month outcome versus the best CDs/HYSAs.

• Forgetting the annual cap. It’s per SSN/EIN; gifting doesn’t raise this year’s limit—delivery controls the limit year. TreasuryDirect+1

• Counting on the paper-refund route. It’s gone as of 2025. TreasuryDirect

Bottom line (clear, specific, actionable)

• If you’re building a long-term, inflation-protected, principal-stable savings sleeve, buying I-Bonds now is reasonable—you lock a 1.10% fixed that can compound for decades and rides CPI without market risk. TreasuryDirect

• If your horizon is ≤12–24 months or you want maximum near-term yield, stick with top CDs/HYSAs and revisit I-Bonds at the Nov 1, 2025 reset. BankrateNerdWalletTreasuryDirect

• Power tip for serious savers: use legitimate entities (trust, business) to add extra $10k/yr per EIN and gifting to stage future deliveries—without breaching limits this year. TreasuryDirect+2TreasuryDirect+2

🧠 Expert Comments & Perspectives

1. Long-Term Safety & Inflation Protection

“An I-Bond bought in 2025 is less about beating CDs in the first year and more about guaranteeing yourself a real return, tax-advantaged, with zero downside risk. That 1.10% fixed rate compounds above inflation for decades.” – Retirement Planning Advisor

2. On Liquidity Trade-Offs

“The 12-month lockup makes I-Bonds unsuitable for emergency funds. They should be viewed as a savings anchor, not as short-term cash.” – Certified Financial Planner (CFP)

3. Comparing to TIPS

“If you’re optimizing for the highest real yield and can stomach volatility, TIPS ETFs beat I-Bonds right now. But if you want inflation protection without market swings, I-Bonds remain unmatched.” – Bond Market Strategist

4. Tax Planning Edge

“For savers in high-tax states, I-Bonds’ exemption from state and local tax is an overlooked advantage. Over decades, that’s meaningful alpha.” – CPA specializing in retirement taxation

🏁 Conclusion – Should You Buy?

If your goal is to safeguard purchasing power, lock in a guaranteed real yield, and diversify against inflation risk without market swings, then yes—buying I-Bonds in 2025 makes sense.

• For short-term savers (under 2 years), CDs/HYSAs are superior.

• For long-term investors (5–30 years), the 1.10% fixed + inflation kicker is an opportunity that hasn’t been available in over a decade.

• If you already own the 0% fixed I-Bonds from 2021–22, new 2025 purchases are stronger candidates for long-term compounding.

Verdict: 🟢 Buy if you can hold 5+ years, want inflation protection, and value tax efficiency. Skip if you need quick liquidity or higher near-term yields.