I Bonds vs EE Bonds: Rates, the 20-Year Guarantee, and Which to Buy
Series I bonds pay a rate that resets with inflation every six months, while Series EE bonds pay one flat fixed rate plus a Treasury guarantee that the bond is worth at least double what you paid at exactly 20 years.
For bonds issued May 1, 2026 through October 31, 2026, I bonds carry a 4.26% composite rate and EE bonds carry a 2.40% fixed rate. That gap looks decisive, but it is misleading. The EE guarantee is worth about 3.5% a year, and you only collect it by holding the bond for the full 20 years.
Both series are backed by the U.S. Treasury, both cap you at $10,000 per person per calendar year, and both earn interest for 30 years.
Series I Bonds vs Series EE Bonds: Side-by-Side
| Series I Bonds | Series EE Bonds | |
|---|---|---|
| How the rate is set | Fixed rate + inflation rate, combined into a composite rate | One fixed rate set before you buy |
| Rate for May 1 - Oct 31, 2026 issues | 4.26% composite (0.90% fixed + 1.67% six-month inflation rate) | 2.40% fixed |
| Rate reset schedule | Inflation piece resets every 6 months from your issue date; Treasury announces May 1 and Nov 1 | Fixed rate holds for the first 20 years; Treasury announces new rates May 1 and Nov 1 |
| 20-year doubling guarantee | None | Yes - one-time adjustment at 20 years if needed |
| Annual purchase limit | $10,000 electronic per SSN per calendar year | $10,000 electronic per SSN per calendar year |
| Minimum holding period | 12 months | 12 months |
| Early redemption penalty | Lose last 3 months of interest if cashed before 5 years | Lose last 3 months of interest if cashed before 5 years; also forfeit the 20-year adjustment |
| Tax treatment | No state or local income tax; federal tax deferred until you cash it or it stops earning at 30 years | No state or local income tax; federal tax deferred until you cash it or it stops earning at 30 years |
Which should you choose?
Buy I bonds if you want inflation protection and the freedom to cash out after 12 months. That covers most savers. Buy EE bonds only if you can lock the money away for a full 20 years and want a guaranteed doubling, which works out to roughly 3.5% a year.
The deciding question is not which rate is higher today. It is whether you can promise not to touch the money for 20 years. If the answer is no, the EE guarantee is worth nothing to you and the I bond is the better bond.
How the I bond rate is set
An I bond rate combines two pieces: a fixed rate that never changes for the life of your bond, and an inflation rate that resets twice a year. Treasury announces both on May 1 and November 1.
For I bonds issued May 1, 2026 through October 31, 2026, the fixed rate is 0.90% and the six-month inflation rate is 1.67%. Together they produce a composite rate of 4.26%.
The reset does not follow the calendar. Your bond's rate changes every six months from its own issue date. A bond bought in July gets its next rate in January, not in November.
This is why I bonds protect purchasing power. When inflation rises, your rate rises with it. When inflation falls, your rate falls too. The 4.26% is not a rate you keep for 30 years, and no page should tell you otherwise.
You can model how a shifting rate compounds with the compound interest calculator.
How the EE bond rate is set
An EE bond earns one fixed rate that is set before you buy it. That rate holds for the bond's first 20 years and does not move with inflation.
For EE bonds issued May 1, 2026 through October 31, 2026, the fixed rate is 2.40%. Interest compounds semiannually. Treasury sets new EE rates on the same May 1 and November 1 schedule, but a new rate only affects new bonds.
After the 20-year mark, the terms can change. Treasury may adjust the interest rate or the way the bond earns interest for the final 10 years of its 30-year life. If you do not like the new terms, you can cash the bond at 20 years, once it has at least doubled.
On the headline rate alone, 2.40% is not competitive. Top savings accounts often beat it, as our best high-yield savings accounts roundup shows. The EE bond's real value is somewhere else.
The 20-year doubling is all or nothing
The EE guarantee is the single most important difference between the two bonds, and almost every comparison page buries it. Treasury promises your EE bond will be worth at least twice what you paid at 20 years. If the fixed rate has not gotten there, Treasury makes a one-time adjustment to close the gap.
Doubling your money in 20 years works out to about 3.5% a year. The stated rate is 2.40%. So the guarantee is worth roughly 1.1 percentage points a year more than the number on the label.
Here is what that looks like on $10,000. Compounding 2.40% semiannually for 20 years gets you to about $16,100. Treasury then adds roughly $3,900 to reach $20,000. That adjustment is the entire reason to own an EE bond.
Now look at year 19. The same bond is worth about $15,700 on its fixed rate alone. No adjustment has happened yet, because the adjustment only happens at 20 years. Cash out that year and you walk away with about $15,700 instead of $20,000.
That final year is worth about $4,300 on a $10,000 bond. It is close to a 27% gain in twelve months. Redeem at 19 years and 11 months and you forfeit every dollar of it.
(These figures compound the 2.40% fixed rate semiannually to illustrate the gap. Treasury publishes the official redemption value for each individual bond.)
That makes an EE bond a genuine 20-year commitment, not a flexible savings vehicle. The headline fixed rate disguises this completely. Anyone comparing 2.40% against a savings account rate is comparing the wrong number, and anyone who might need the cash early is buying a bond whose main feature they will never receive.
The guarantee also gives you a break-even you can actually test. Doubling in 20 years is about 3.53% a year. An I bond earns its own fixed rate plus inflation, and the fixed rate on bonds issued May 1, 2026 through October 31, 2026 is 0.90%. Subtract one from the other and the EE bond only wins if inflation averages less than roughly 2.6% a year over the full 20 years. Above that, the I bond pulls ahead.
That threshold is not universal. It moves with the fixed rate of the I bond you actually buy. A 1.50% fixed rate drops the break-even to about 2.0% inflation and makes the EE guarantee much harder to beat; a 0.20% fixed rate lifts it to about 3.3% and makes the EE bond look better. Check the fixed rate on the day you buy, subtract it from 3.53%, and you have your own number.
The rules both bonds share
I bonds and EE bonds run on the same basic rulebook, so these points do not help you choose between them.
Purchase limit: $10,000 in electronic bonds per Social Security number per calendar year, for each series. That means one person can buy $10,000 of I bonds and $10,000 of EE bonds in the same year, for $20,000 total. The minimum purchase is $25.
Minimum hold: you cannot cash either bond until it is 12 months old. There is no exception for changing your mind.
Early redemption penalty: cash either bond before it is 5 years old and you lose the last 3 months of interest. After 5 years there is no penalty on either series.
Maturity: both earn interest for 30 years, then stop.
Where to buy: savings bonds are sold only through TreasuryDirect, not through brokerages. Marketable Treasury securities like bills and notes are different and do trade through brokers, which our best brokers for Treasury bonds roundup covers.
Tax treatment of I bonds and EE bonds
Both series get the same three tax features, and the state tax break is the one savers most often overlook.
Interest on I bonds and EE bonds is exempt from state and local income tax. In a high-tax state that is a real edge over a CD or savings account, where every dollar of interest is taxed by the state.
Federal income tax applies, but it is deferred. Most owners report nothing until they cash the bond or it stops earning interest at 30 years. You may instead elect to report interest each year, which can make sense for a low-income owner.
The Education Savings Bond Program can exclude the interest from federal tax entirely. The rules are narrow. The bond must be issued after 1989, and you must have turned 24 before the bond's issue date, meaning before the first day of the month it was issued in. The bond must be registered to you, or to you and your spouse. A bond registered to your child does not qualify, even once that child reaches college age. Your modified adjusted gross income must fall under a limit published each year on IRS Form 8815, and you cannot file married filing separately. You also have to cash the bond and pay the qualified expenses in the same tax year, and those expenses must be for you, your spouse, or a dependent you claim on your return.
Compare that to a taxable account. Our HYSA vs CD breakdown shows how much a fully taxable rate has to clear to match a state-tax-free bond.
Which bond fits your situation
Match the bond to your timeline first and the rate second.
Pick I bonds if your horizon is 1 to 10 years, if you want a hedge against inflation, or if you are not certain when you will need the money. After 5 years you can cash out with no penalty and keep everything you earned.
Pick EE bonds only for money you are certain you will not touch for 20 years. A newborn's college fund, or a gift meant to be opened in two decades, are the honest use cases. Anything shorter and you are buying a 2.40% bond and calling it a 3.5% one.
Skip both if the money is your emergency fund. The 12-month lockup disqualifies savings bonds for cash you may need next month. A savings account or money market is the right home, and our CD vs money market comparison covers the near-term options.
One more framing point: neither bond is a growth investment. Both are savings instruments with a government guarantee. If your horizon is long and you can accept volatility, the tradeoff in stocks vs bonds matters far more to your outcome than the choice between these two series. Run the numbers with our investing calculators before you commit a 20-year block of savings.
Frequently asked questions
I bonds vs EE bonds: which one pays more?
I bonds pay more today. For bonds issued May 1, 2026 through October 31, 2026, the I bond composite rate is 4.26% versus 2.40% fixed for EE bonds. Over a full 20 years EE bonds can win, because the doubling guarantee works out to about 3.5% a year no matter what the fixed rate is. The I bond rate, by contrast, resets every six months and could be higher or lower.
What happens if I cash an EE bond before 20 years?
You get only the value built up from the fixed rate, and you forfeit the doubling guarantee completely. Treasury makes the one-time adjustment at the 20-year mark, not before. As an illustration, compounding a $10,000 EE bond at 2.40% semiannually puts it near $15,700 at year 19 against a guaranteed $20,000 at year 20, so redeeming a year early costs roughly $4,300. These are illustrative figures, not official values. Treasury publishes the actual redemption value for each individual bond.
How much can I buy in I bonds and EE bonds each year?
$10,000 per series, per Social Security number, per calendar year. The limits are separate, so one person can buy $10,000 in electronic I bonds and $10,000 in electronic EE bonds in the same year, for $20,000 combined. The minimum purchase is $25.
When can I cash a savings bond without a penalty?
After the bond is 5 years old. You cannot cash either an I bond or an EE bond during its first 12 months at all. Between 12 months and 5 years you can cash it, but you lose the last 3 months of interest.
Do I pay state taxes on I bond or EE bond interest?
No. Interest on both Series I and Series EE savings bonds is exempt from state and local income tax. Federal income tax still applies, but you can defer it until you cash the bond or until it stops earning interest at 30 years.
Can I avoid federal tax on savings bond interest?
Sometimes, through the Education Savings Bond Program. If you use the proceeds for qualified higher education expenses in the same year you cash the bond, the interest can be excluded from federal tax. You must have turned 24 before the bond's issue date, the bond must be in your name (or yours and your spouse's), the expenses must be for you, your spouse, or a dependent you claim, your modified adjusted gross income must be under the limit on IRS Form 8815, and you cannot file married filing separately.
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Sources
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