I Bond Switch Calculator
Tell it when you bought an I bond and what it is worth, and see what cashing it to buy one at today's fixed rate would earn each year, what the penalty costs, and how many months until you are ahead. Every figure comes from Treasury's published rates and its own formula.
Why people ask this
An I bond's fixed rate is set for life when it is issued. Bonds bought from May 2020 to October 2022 carry a 0% fixed rate; Treasury's fixed rate has since risen, and the current period on file (May 2026 – October 2026) pays 0.90%. Because the inflation part is the same for every bond, a bond with a higher fixed rate earns more every six months for as long as you hold it. Cashing the old bond costs three months of interest if it is under five years old, uses up part of this year's purchase limit, and brings forward the federal tax on its interest. This page puts those pieces on one sheet.
Method
Both composites use Treasury's formula: fixed + 2 × inflation + fixed × inflation, rounded to four decimals and never below zero. The amount moved is the smaller of the bond's value and your remaining purchase room. The yearly gain is that amount times the difference in composites. The penalty, for bonds under 60 months old, is the amount moved times the old composite times 3/12. Breakeven is the penalty divided by one twelfth of the yearly gain. Interest not yet taxed is the value minus what you paid, pro rata to the amount moved, times the marginal rate you enter.
Worked example
A bond bought in January 2022 (0% fixed) worth $11,500 against $10,000 paid, 48 months old, with a new fixed rate of 1.40%, a 2.04% inflation rate and a 22% bracket. Old composite 4.08%; new composite 5.51%. Moving $10,000 earns $143.00 more a year; the penalty is $102.00; breakeven 8.56 months; federal tax now $286.96 on $1,304.35 of interest. These figures are recomputed by the engine on every build and guarded by scripts/check-i-bond-switch.mjs.
What this leaves out
It does not forecast the next inflation rate or fixed rate, and it does not compare I bonds with TIPS, CDs or anything else. The penalty is approximated from the current composite. The purchase room is yours to enter; the tool does not know what you have already bought this year. Education-expense exclusions and the gift route are described in the FAQ, not modelled.
Sources: TreasuryDirect — I bonds interest rates (rates and formula) · 31 CFR Part 359 (12-month hold, three-month penalty) · 31 CFR Part 363 (annual purchase limit) · every rate period since 1998 on this site.
Informational only, not financial or tax advice. The calculator computes; it does not say whether to cash a bond.
Last reviewed: October 2026 · Rates on file through the May 2026 – October 2026 period.
Frequently asked questions
Why does the inflation rate hardly change the answer?
Both bonds get the same semiannual inflation rate, so it appears on both sides of the comparison. The composite formula leaves one small cross term, fixed rate × inflation rate, so the gap between the two bonds equals the fixed-rate gap times (1 + the inflation rate). A 1.40% fixed rate beats a 0% one by about 1.40% a year whatever inflation does.
How is the three-month penalty worked out?
Cashing an I bond held less than five years forfeits its last three months of interest (31 CFR 359.50). The tool approximates that as three twelfths of the old bond's current composite rate on the amount you cash. The exact figure depends on which months fall in the window, since the bond's rate changes on its own six-month anniversaries; TreasuryDirect shows the value net of penalty in your account.
What about the $10,000 limit?
Electronic I bonds are capped at $10,000 per person per calendar year (31 CFR 363.52). If your old bond is worth more than the room you have left, the tool moves only what fits and shows the rest staying put. You can cash part of a bond as long as at least $25 remains, and a spouse, child or trust has its own limit.
Do I owe tax when I cash the old bond?
Unless you have been reporting the interest each year, all the interest the bond has earned is federal income in the year you redeem it. It is exempt from state and local tax. The tool shows the tax at the rate you enter; it is tax you would owe eventually anyway, so it is a timing question unless your bracket changes. Interest may be excluded when the money pays qualified education costs, subject to income limits in IRS Form 8815.
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