Money · Cash Management

I-bonds and T-bills:
government savings tools worth knowing.

READ3 min · UPDATED2026-04-22

Reviewed against primary sources cited at the bottom of this page.

I-bonds protect against inflation. T-bills can beat your high-yield savings account, especially in high-tax states. This page covers how to actually buy them, the limits and lockups, and when they make sense over a HYSA.

This page covers US-specific accounts and tax law. Outside the US? The priority order is the same, the account names differ (ISA in the UK, TFSA/RRSP in Canada, Super in Australia, etc.).

THE SHORT VERSION

I-bonds: buy at TreasuryDirect.gov, $10,000 per person per year, must hold 1 year minimum, lose 3 months of interest if sold in years 1 to 5. Rate adjusts every May and November. T-bills: short-term government bonds, 4-week to 52-week maturities, bought at TreasuryDirect or via brokerage, currently competitive with HYSAs and exempt from state income tax.

I-bonds

US government savings bonds that earn a composite rate: a fixed rate (set at purchase, never changes for that bond) plus an inflation adjustment that recalculates every 6 months based on CPI-U verify×DON'T TRUST, VERIFYClaim: I-bond composite rate combines fixed rate (set at purchase) and semiannual inflation rate. Current rates posted each May 1 and November 1.Verify at: TreasuryDirect I-bond rates ↗Rate resets twice per year; buying window matters..

Limits

$10,000 per person per year via TreasuryDirect
$5,000 additional via IRS tax refund (if you buy with refund money)
$10,000 per entity (business, trust) per year

How to buy

Open an account at TreasuryDirect.gov ↗. Link a bank account. Purchase. 1 to 3 business days to clear. The TreasuryDirect interface is dated and clunky. Expected. It is the official government site and it works.

Holding rules

Minimum hold: 1 year (you cannot sell sooner)
Sell before 5 years: forfeit the last 3 months of interest
Hold 5+ years: no early-withdrawal penalty

When they make sense

Emergency fund money you will not need for 12+ months. Inflation-hedge component of medium-term savings. Ladder purchases across tax years to build a rolling supply. They do not make sense for money you might need within a year, amounts over $10,000 per person per year, or when HYSA yields are higher than the current I-bond composite rate.

T-bills (Treasury bills)

Short-term US government securities. Maturities: 4, 8, 13, 17, 26, 52 weeks. Sold at a discount to face value. You pay less than face. At maturity you receive full face value. The difference is your interest.

Where to buy

TREASURYDIRECT

Buy direct from government. No fees. Minimum $100. Auction-based: you specify dollar amount and buy at whatever auction rate clears. treasurydirect.gov ↗

FIDELITY / SCHWAB

Search "T-bill" in fixed income. Buy newly issued or secondary. No commission at Fidelity or Schwab. Easier interface than TreasuryDirect.

Tax treatment

Interest on Treasury securities is exempt from state and local income tax. Federal income tax applies verify×DON'T TRUST, VERIFYClaim: US Treasury interest is exempt from state and local income tax; federal tax applies.Verify at: IRS Topic 403 ↗31 USC 3124 establishes the state tax exemption for federal obligations.. This makes T-bills attractive relative to HYSAs in high-tax states.

T-bill vs HYSA math, California example:

5% T-bill, no state tax: full 5% after state. 5% HYSA, 9.3% CA tax: 4.5% after state. In a 0% state (TX, FL, etc.), the two are equivalent. In high-tax states, T-bills win on equal yield.

-> Banking, the HYSA setup -> Emergency Fund, where this fits -> Saving for a House, short-horizon cash -> Banking Calculator

Last updated 2026-04-22. Not financial advice. Rates change. Verify current yields before purchase.

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