Watch the I-Bond fixed rate, not the headline composite rate (which just resets with inflation). I-Bonds are attractive when the fixed rate is close to or above the real yield on a comparable TIPS, because I-Bonds also defer federal tax, are exempt from state tax, can never lose value, and can be redeemed anytime after a year. The home page shows the live comparison and a buy verdict.

It mostly comes down to your bond's fixed rate versus today's fixed rate, gated by the 5-year penalty window. If you hold an old bond with a low (often 0%) fixed rate and today's fixed rate is meaningfully higher, redeeming and rebuying can be worth it once you're past the 3-month-interest penalty (which applies before 5 years). Enter your purchase era on the Redeem page for a verdict.

Neither is always better. TIPS often offer higher real yields and have no purchase limit, but they're taxed annually on inflation adjustments ("phantom income") and can be sold only at market price. I-Bonds defer all tax until redemption, are state-tax-free, have a deflation floor, and can be redeemed at face value after 12 months — but are capped at $10,000 per person per year.

Buy near month-end: an I-Bond earns a full month of interest no matter which day you buy, so buying at month-end credits you the whole month while holding only a day or two. Leave 1–2 business days so TreasuryDirect settles before the 1st. Redeem early in the month: interest posts on the 1st, so once it passes you've banked that month and holding longer earns nothing until the next 1st.

I-Bond interest is exempt from state and local income tax. Federal tax is deferred until you redeem or the bond matures (you can elect to report annually, but most don't). If the proceeds pay for qualified higher-education expenses and you meet the income limits, the interest can be fully federal-tax-free under the Education Savings Bond Program. TIPS, by contrast, are taxed every year on inflation adjustments.

The composite rate is what an I-Bond actually pays right now; it combines a fixed rate with a variable inflation rate and resets every six months. The fixed rate is set when you buy and stays with the bond for its entire 30-year life. Because the inflation part resets for everyone, the fixed rate is the durable advantage and the number to compare across bonds.