Scott Gottlieb, CPA

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June 2006

I Bonds To Earn 2.41% When Bought From May Through October 2006

May 1, 2006
The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which will apply for the life of the bond, and the inflation rate. The 2.41 percent earnings rate for I bonds bought from May through October 2006 will apply for the first six months after their issue. The earnings rate combines the 1.40 percent fixed rate of return with the 1.00 percent annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 198.8 to 199.8 from September 2005 to March 2006, a six-month increase of 0.50 percent.

Treasury’s inflation-indexed I bonds are designed to offer all Americans a way to save that protects the purchasing power of their investment by assuring them a real rate of return above inflation. I bonds have features that make them attractive to many investors. They are sold in electronic form in amounts of $25 and above, or in paper form at face value in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000, and earn interest for as long as 30 years. I bond earnings are added every month and interest is compounded semiannually. They are state and local income tax exempt, and Federal income tax on I bond earnings can be deferred until the bonds are cashed or they stop earning interest after 30 years. Investors cashing I bonds before five years are subject to a 3-month earnings penalty.

Savers and investors can now open an on-line account to purchase I bonds in electronic form, as well as EE savings bonds and Treasury marketable securities, through the website Account holders can purchase, manage, and redeem I bonds over the Internet 24 hours a day, seven days a week.

Series I, inflation-indexed savings bonds purchased from May through October 2006, will earn a 1.40 percent fixed rate of return above inflation. The 1.40 percent fixed rate applies for the 30-year life of I bonds purchased during this six-month period.

View the earnings rates and actual yields for I bonds shown in the Savings Bonds Earnings Report.

Information about savings bonds is available at Public Debt’s website at An Earnings Report, which contains rate and yield information for bonds is available by mail. Send a postcard asking for “Earnings Report” to Bureau of the Public Debt, 200 Third Street, Parkersburg, WV 26106-5312.






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The materials on this Web site are for informational purposes only and are not intended and should not be construed as accounting advice. This information is not intended to create, and receipt of it does not constitute, a CPA-Client relationship. You should not act upon this information without seeking counsel from a Certified Public Accountant