Breaking: Treasury Announces New I Bond Rate 4.03% Through April 2026 – Higher Inflation Protection
The U.S. Department of the Treasury announced a new Series I Bond rate of 4.03% effective November 1, 2025 through April 30, 2026, representing a modest increase from the previous 3.98% rate. This I Bond rate November 2025 combines a fixed component of 0.90% with an inflation-adjusted component of 3.12%, providing inflation-protected returns for conservative savers and emergency fund planners.
The Treasury I Bond rate increase to 4.03% reflects recent inflation readings showing Consumer Price Index growth at 3.0% year-over-year, up from 2.4% in March 2025. While the 4.03% rate remains well below the historic peak of 9.62% reached in May 2022, it continues to offer meaningful inflation protection for emergency reserves and conservative savings.
Table of Contents
- What Is the New Treasury I Bond Rate 4.03%?
- I Bond Rate Breakdown: Fixed vs. Inflation Components
- Historical I Bond Rate Context and Comparison
- Why I Bond Rates Matter for Emergency Funds
- How to Buy I Bonds Starting November 1, 2025
- I Bond Returns: Detailed Calculations and Examples
- Tax Implications of I Bond Interest Earnings
- I Bond vs. High-Yield Savings: Which Is Better?
- Emergency Fund Strategy with I Bond Laddering
- Federal Reserve Rate Cuts and Future I Bond Rates
What Is the New Treasury I Bond Rate 4.03%?
The Series I Savings Bond represents a unique government savings product that combines inflation protection with a guaranteed minimum return, making it particularly attractive during uncertain economic periods. The newly announced 4.03% rate for November 2025–April 2026 represents the interest earned on I bonds purchased during this period.
Key components of the 4.03% rate:
Fixed Rate Component: 0.90%
This portion never changes for the life of your I bond. Any bond purchased between November 1, 2025 and April 30, 2026 will earn 0.90% annually for its entire 30-year maturity period, regardless of future rate changes. This fixed component has decreased from the 1.10% rate on bonds purchased through October 2025, reflecting the Treasury’s adjustment as longer-term inflation expectations moderate.
Inflation-Adjusted Component: 3.12%
This portion changes every six months based on current inflation data as measured by the Consumer Price Index. The 3.12% represents the annualized inflation rate over the past six months and will adjust to a different percentage on May 1, 2026. If inflation rises, this component increases; if deflation occurs (rare), it could decline.
Combined Composite Rate: 4.03%
Adding the fixed 0.90% to the inflation component 3.12% produces the total 4.03% annual return that bondholders receive for the next six months. This composite rate applies to all I bonds purchased between November 1, 2025 and April 30, 2026.
I Bond Rate Breakdown: Fixed vs. Inflation Components
Understanding how I Bond rates combine fixed and variable components helps savers evaluate whether this investment fits their emergency fund strategy.
The dual-rate mechanism:
Fixed Rate (Never Changes)
- Determined at purchase
- Remains constant for 30 years
- Your 0.90% stays 0.90% forever
- Compensates you for lending to the government
- Decreased from 1.20% in October 2024 to 1.10% in May 2025 to 0.90% now
Inflation Rate (Adjusts Semiannually)
- Based on Consumer Price Index data
- Changes on May 1 and November 1
- Currently 3.12% (through April 30, 2026)
- Will reset to a new percentage May 1, 2026
- Protects your purchasing power against inflation
Why the decreasing fixed rate?
The Treasury reduced the fixed component from 1.10% to 0.90% because economic conditions have shifted. With the Federal Reserve cutting rates in October 2025 and signaling more cuts ahead, the Treasury adjusted downward the guaranteed component, assuming lower future interest rates.
This represents an important consideration for emergency fund planners: buying I bonds now locks in 0.90% fixed for 30 years. If the Fed continues cutting rates and inflation moderates, future I bond fixed rates will likely be even lower.
Historical I Bond Rate Context and Comparison
The 4.03% I Bond rate November 2025 sits in the middle range of recent history, representing a significant decline from 2022-2023 peaks but remaining attractive compared to long-term historical averages.
Historical I Bond rate progression:
Key observations from historical data:
The 4.03% rate represents a recovery from the 3.11% low in November 2024, indicating that inflation has picked back up from its earlier 2025 low. However, it remains substantially below the pandemic-era peaks, reflecting moderate inflation relative to 2022-2023 extremes.
The fixed rate decline from 1.20% to 0.90% signals Treasury expectations of continued monetary accommodation from the Federal Reserve, with lower prevailing interest rates ahead.
Why I Bond Rates Matter for Emergency Funds
Treasury I Bonds offer unique advantages for emergency fund allocation, particularly for reserves exceeding immediate 3-month expense thresholds.
How I Bonds fit emergency fund strategy:
Traditional emergency fund hierarchy:
- Tier 1 (Immediate access): 1-3 months expenses in high-yield savings (currently ~4.2% yields)
- Tier 2 (Short-term reserve): 3-6 months expenses in I Bonds or short-term CDs (4.03% I Bonds)
- Tier 3 (Long-term security): 6-12 months expenses in more conservative investments
This tiered approach recognizes that emergency funds serve different purposes. Your immediate needs require liquid cash; longer-term reserves can accept modest illiquidity in exchange for better returns.
I Bond advantages for emergency reserves:
Inflation protection: The 3.12% inflation component ensures your purchasing power isn’t eroded by rising prices
Government guarantee: Treasury securities carry zero credit risk—the full faith and credit of the U.S. government backs I Bonds
Tax efficiency: You can defer tax reporting until redemption, and state/local taxes don’t apply
30-year earnings potential: Even emergency funds not needed for decades continue earning 4.03% fixed plus inflation adjustments
Modest yield over alternatives: The 4.03% rate exceeds the 4.2% average high-yield savings by a small margin, though with less liquidity
I Bond disadvantages for emergency funds:
One-year lock-in: You cannot access your money for 12 months without exception
Early redemption penalty: Cashing bonds before 5 years results in a 3-month interest penalty
Monthly interest accrual only: Unlike savings accounts with daily compounding, I Bond interest compounds semiannually
Not immediately available: The redemption process takes several business days
How to Buy I Bonds Starting November 1, 2025
Purchasing Treasury I Bonds has become exclusively electronic as of January 1, 2025, requiring a TreasuryDirect account through the official U.S. Treasury website.
Step-by-step I Bond purchase process:
Step 1: Create a TreasuryDirect Account
- Visit TreasuryDirect.gov
- Select “Open an Account”
- Provide personal information (Social Security Number, bank details)
- Verify identity and link your bank account
Step 2: Fund Your Account
- Transfer funds from your bank to your TreasuryDirect account
- Minimum purchase is $25
- You can buy any amount to the penny (e.g., $1,500.17)
Step 3: Purchase I Bonds
- In TreasuryDirect, select “Buy Securities”
- Choose “Series I Savings Bonds”
- Specify the purchase amount
- Complete the transaction
Step 4: Hold Your Bonds
- Monitor your I Bond holdings in TreasuryDirect
- Track current value and interest earned
- Plan redemption strategy
Annual purchase limits:
Under current Treasury rules, you can purchase maximum $10,000 in I Bonds per calendar year through TreasuryDirect using your Social Security Number. This limit exists to prevent extremely wealthy individuals from monopolizing government securities.
However, there’s a workaround: You can purchase an additional $5,000 in I Bonds annually using your tax refund, bringing the total potential purchase to $15,000 annually. This requires checking the “I Bond” option when preparing your tax return.
I Bond Returns: Detailed Calculations and Examples
Understanding exactly how much your I Bond investment will earn requires calculating both the initial six-month return and the long-term 30-year potential.
Six-month return calculation (November 1, 2025 – April 30, 2026):
I Bonds earn interest monthly, compounded semiannually. The 4.03% annual rate translates to approximately 2.015% for the first six months.
Example: $10,000 I Bond investment
| Metric | Amount |
|---|---|
| Initial investment | $10,000.00 |
| Six-month return (4.03% annualized) | $201.50 |
| Value after 6 months (April 30, 2026) | $10,201.50 |
| Annual full-year return at this rate | $403.00 |
Important caveat: The 4.03% rate applies only through April 30, 2026. Starting May 1, 2026, the inflation component will reset, and your return will change.
20-year projection assuming rate stability (hypothetical):
This scenario assumes the 4.03% rate continues unchanged for 20 years—unrealistic but useful for comparison:
| Year | Bond Value | Cumulative Interest |
|---|---|---|
| Year 1 | $10,403.00 | $403.00 |
| Year 5 | $12,237.17 | $2,237.17 |
| Year 10 | $14,971.08 | $4,971.08 |
| Year 15 | $18,322.28 | $8,322.28 |
| Year 20 | $22,413.81 | $12,413.81 |
Real-world scenario: Account for changing rates
In reality, your I Bond will experience different returns every six months as the inflation component adjusts. If inflation averages 2.5% over the next 20 years, combined with the 0.90% fixed rate, your average return would be approximately 3.4% annually, producing a $20-year value of approximately $18,500.
Tax Implications of I Bond Interest Earnings
Understanding I Bond tax treatment is essential for emergency fund planning, as it affects your actual after-tax return.
Federal income tax on I Bond interest:
I Bond interest is subject to federal income tax, though you have flexibility in timing your tax reporting:
Option 1: Report annual earnings each year
- File Form 1040 or 1040-SR
- Report the 4.03% (or applicable) annual interest
- Pay tax on this amount annually
- More complex bookkeeping but earlier tax payment
Option 2: Defer all tax reporting until redemption
- Continue purchasing I Bonds without annual tax filings
- When you cash the bond (or after 30 years), report all accumulated interest
- Simpler administration but larger tax bill in redemption year
State and local tax treatment:
Excellent news for most savers: I Bond interest is exempt from state and local income taxes, a significant advantage over high-yield savings accounts. For residents of high-tax states (California, New York, New Jersey), this state tax exemption can provide meaningful additional returns.
Tax-advantaged redemption strategy for education:
If you use I Bond proceeds for qualified higher education expenses (tuition, fees, mandatory books), you may exclude the interest from taxable income entirely. This provision, established to encourage education savings, creates significant tax planning opportunities.
Example tax implications:
For a $10,000 I Bond investment earning $403 annually:
Tax scenario for high-income earner (37% federal rate):
- Interest earned: $403
- Federal tax owed: $149.11
- State tax (example: 5% NY rate): $20.15
- Total tax: $169.26
- After-tax return: $233.74 (2.34% after-tax for six months)
Tax scenario with state exemption (37% federal, 5% state):
- Interest earned: $403
- Federal tax owed: $149.11
- State tax: $0 (I Bonds exempt)
- Total tax: $149.11
- After-tax return: $253.89 (2.54% after-tax for six months)
I Bond vs. High-Yield Savings: Which Is Better?
For emergency fund planning, the choice between I Bonds and high-yield savings accounts depends on your specific situation and timeline.
Detailed comparison:
Decision framework:
Choose I Bonds if:
- You can lock away emergency reserves for 12+ months
- State/local income taxes significantly impact your situation
- You want inflation protection for longer-term reserves
- You value government backing of principal
Choose High-Yield Savings if:
- You need immediate access to emergency funds
- Your emergency fund covers only 1-3 months of expenses
- You prefer simplicity and maximum flexibility
- You prioritize immediate liquidity over rate optimization
Hybrid strategy (recommended):
Maintain a tiered emergency fund combining both:
- 3 months expenses in high-yield savings ($9,000 for household with $3,000 monthly expenses)
- 3-6 months expenses in I Bonds ($9,000-$18,000)
- This provides liquidity for immediate needs while gaining inflation protection for longer-term reserves
Emergency Fund Strategy with I Bond Laddering
I Bond laddering is a strategy where you purchase I Bonds at different times to ensure regular access to maturing reserves without the early-redemption penalty.
How I Bond laddering works:
Since I Bonds require 12 months minimum holding before redemption without penalty, purchasing bonds on a staggered schedule ensures that some bonds mature penalty-free each year:
Year 1 strategy (starting November 2025):
- November 2025: Purchase $5,000 I Bond (redeemable Nov 2026)
- December 2025: Purchase $5,000 I Bond (redeemable Dec 2026)
- January 2026: Purchase $5,000 I Bond (redeemable Jan 2027)
- February 2026: Purchase $5,000 I Bond (redeemable Feb 2027)
Continuing pattern:
- Each month after year one, redeem the oldest bond (penalty-free after 12 months)
- Simultaneously purchase a new bond with that proceeds
- This creates a rolling system where emergency reserves are available monthly
Annual limit constraint:
Maximum annual I Bond purchases of $10,000 per calendar year (or $15,000 with tax refund) means you cannot purchase monthly to create this perfect ladder. More realistic ladder:
Realistic annual laddering with $15,000 limit:
- $5,000 in January (redeemable Jan next year)
- $5,000 in July (redeemable July next year)
- $5,000 as part of tax refund (redeemable as filed year following)
This provides semi-annual liquidity opportunities while maintaining emergency fund adequacy.
Federal Reserve Rate Cuts and Future I Bond Rates
Understanding how Federal Reserve policy affects future I Bond rates helps emergency fund planners anticipate changes.
How Fed rate cuts impact I Bonds:
The Federal Reserve’s October 29, 2025 rate cut to 3.75%–4.00% affects I Bonds indirectly through the Consumer Price Index, which measures inflation. Lower Fed rates typically lead to lower inflation over time, which reduces the inflation component of future I Bond rates.
Future rate prediction:
With markets pricing in a 94% probability of another December 2025 Fed rate cut, inflation may moderate further. This suggests:
Inflation component projection for May 1, 2026:
- Current 3.12% inflation component may decline to 2.5-2.8%
- Combined with the 0.90% fixed rate, next rate could be 3.4-3.7%
- This represents a decline from the current 4.03%
Long-term Fed rate path through 2027:
Fed projections show rates potentially declining to 3.1% by end-2027. This would typically support I Bond fixed rates remaining in the 0.5-1.0% range, with inflation components adjusting based on actual CPI data.
Strategic implication:
If you believe inflation will decline (as Fed rate cuts suggest), purchasing I Bonds now at 4.03% locks in higher returns for the fixed 0.90% component before future rates decline. Emergency fund planners considering I Bonds should act before May 1, 2026 announcement if rate declines are anticipated.
FAQs: Treasury I Bonds November 2025
What is the new I Bond rate starting November 1, 2025?
The composite rate is 4.03%, consisting of 0.90% fixed (forever) and 3.12% inflation-adjusted (changes May 1, 2026).
Can I buy I Bonds with my emergency fund?
Yes, for portions you won’t need for 12+ months. Keep 1-3 months in liquid high-yield savings; place 3-6 months in I Bonds for inflation protection.
Is there a 12-month lock-in period?
Yes. You cannot redeem I Bonds for 12 months. Redemption before 5 years results in a 3-month interest penalty.
How do I buy I Bonds?
Visit TreasuryDirect.gov, create an account, link your bank, and purchase electronically. Minimum $25, maximum $10,000 per calendar year.
Will the rate decrease when the Fed cuts rates further?
Possibly. The inflation component could decline if inflation moderates, reducing future composite rates. The 0.90% fixed rate never changes.
Are I Bonds better than high-yield savings for emergency funds?
Both serve different purposes. I Bonds provide inflation protection and state-tax exemption for long-term reserves; high-yield savings offer immediate liquidity.
Do I pay taxes on I Bond interest annually?
You have a choice: report annually or defer all tax reporting until redemption. Interest is exempt from state/local taxes.
Can I use I Bonds for education expenses tax-free?
Yes. If used for qualified higher education expenses, I Bond interest can be excluded from taxable income.
Conclusion: I Bonds as Emergency Fund Components
The Treasury I Bond rate of 4.03% beginning November 1, 2025 offers meaningful value for emergency fund planning, particularly for reserves exceeding immediate 12-month requirements. The combination of government backing, inflation protection through the 3.12% component, and state-tax exemption creates an attractive middle ground between maximum-liquidity high-yield savings and longer-term investments.
For emergency fund strategists, I Bonds deserve consideration as a Tier 2 holding—after establishing immediate-access savings but as a core component of longer-term financial security. The declining fixed-rate trend (1.20% to 1.10% to 0.90%) suggests that purchasing I Bonds before potential future rate decreases may be strategically advantageous, locking in higher fixed returns for 30 years.