COMPARISON · MONEY · SAVINGS BONDS
The I Bond pays a 4.26% composite rate and the EE Bond pays a 2.40% fixed rate — so the I Bond looks like the winner. But the EE Bond carries a Treasury promise: it doubles at 20 years, a 3.53% effective APY no matter what the stated rate is. On $10,000 over 5 years in the 22% federal bracket, the I Bond grows to $12,319.37 and keeps $11,809.11 after federal tax; the EE Bond grows to $11,259.00 and keeps $10,982.02 — I Bonds win by $827.09. Stretch the horizon to 20 years with low inflation, though, and the duel flips — pick your horizon below.
Enter the I Bond composite rate, the EE Bond fixed rate, your deposit, horizon, and federal bracket. The calculator grows each bond with annual compounding, applies the 3-month early-redemption penalty under 5 years, applies the Treasury’s 20-year doubling guarantee to the EE Bond, and taxes the gain at your federal rate only — both bonds are exempt from state and local tax under 31 U.S.C. §3124, with federal tax deferred until redemption.
Rate, lock, and the doubling guarantee. The I Bond’s headline is 4.26% (0.90% fixed + 3.34% inflation, TreasuryDirect, May 1 – October 31, 2026) — but that composite resets every 6 months and the next reset lands November 1, 2026. The EE Bond’s headline is a modest 2.40% fixed — but Treasury guarantees it doubles at 20 years, which is a 3.53% effective APY even if the stated rate stays low. Both bonds: exempt from state and local tax (31 U.S.C. §3124), federal tax deferred until redemption, 12-month lock, 3 months of interest forfeited if redeemed before 5 years, $10,000 per person per series per year electronic cap. At the defaults on $10,000 over 5 years in the 22% bracket: the I Bond grows to $12,319.37 and keeps $11,809.11; the EE Bond grows to $11,259.00 and keeps $10,982.02 — I Bonds win by $827.09.
Setup: $10,000, a 4.26% I Bond composite (May–Oct 2026 issue window), a 2.40% EE fixed rate, a 5-year horizon, and a 22% federal bracket.
Line 1 — the gross. I Bond: $10,000 × 1.04265 = $12,319.37 (no penalty — you held the full 5 years). EE Bond: $10,000 × 1.0245 = $11,259.00. The I Bond leads by $1,060.37 before tax — the inflation kicker is doing the work.
Line 2 — the tax. Federal only, deferred to redemption: I Bond: $10,000 + ($12,319.37 − $10,000) × 0.78 = $11,809.11 kept. EE Bond: $10,000 + ($11,259.00 − $10,000) × 0.78 = $10,982.02 kept. State and local tax: $0 on both — 31 U.S.C. §3124 covers every dollar of savings-bond interest.
Line 3 — the verdict. $11,809.11 − $10,982.02 = $827.09 on $10,000 — I Bonds win. The same 22% rate hits both sides, so the winner is decided by the pre-tax gap alone.
Branch — 1 year (penalty bites): the 3-month forfeit means you earn ~9 months of interest. I Bond: $10,000 × 1.04260.75 = $10,317.83 gross, $10,247.91 after tax. EE Bond: $10,000 × 1.0240.75 = $10,179.47 gross, $10,139.98 after tax. I Bonds win by $107.92 — but remember you cannot touch either bond before month 12 at all.
Branch — 20 years, inflation holds at 4.26%: I Bond: $10,000 × 1.042620 = $23,033.21 gross, $20,165.90 after tax. EE Bond: the 2.40% rate alone would only reach $16,069 — so the Treasury’s doubling guarantee kicks in and it lands at $20,000.00 gross, $17,800.00 after tax (a 3.53% effective APY). I Bonds win by $2,365.90 — but only if inflation stays near 3.3% for two decades.
Branch — 20 years, low inflation (enter 3.42% as the I Bond’s expected average): that 3.42% is 0.90% fixed + ~2.5% inflation. I Bond: $19,592.54 gross, $17,482.18 after tax. EE Bond: still $17,800.00 after tax — EE Bonds win by $317.82. This is the whole duel in one line: the doubling guarantee is a 3.53% floor, so any I-Bond average under ~3.5% loses at 20 years. At today’s fixed rate, that means average inflation under roughly 2.5–3%.
Branch — the 37% bracket (5 years, everything else at default): I Bond keeps $10,000 + $2,319.37 × 0.63 = $11,461.20; the EE Bond keeps $10,793.17 — I Bonds win by $668.04. The higher bracket shrinks the edge (the deferred tax hits the I Bond’s bigger gain harder) but cannot flip it here. Note: if you use either bond for qualified higher-education expenses and your income is under the phase-out, the federal tax can be excluded entirely — the calculator does not model that; it prices the taxable case.
Branch — the error case: set the federal bracket to 100% or more and the calculator refuses — under 100% only, please. It also refuses a horizon that isn’t 1, 5, or 20, and any rate over 25% (a typo check, since no savings bond has ever paid that).
| Output | Formula | What it means |
|---|---|---|
| I Bond gross value | A × (1 + rI)n, with n = horizon − 0.25 under 5 years | $12,319.37 at the defaults — the 0.25-year haircut is the 3-month early-redemption penalty. |
| EE Bond gross value | max(2A, A × (1 + rE)n) at 20 years | $11,259.00 at the defaults; at 20 years the doubling guarantee floors it at $20,000.00. |
| After-tax value (either) | A + (gross − A) × (1 − federal) | $11,809.11 (I) and $10,982.02 (EE) at the defaults — federal tax only, deferred to redemption; state tax is zero by law. |
| Effective APY | (gross ÷ A)1/n − 1 | 4.26% I / 2.40% EE at the 5-year defaults; the EE’s 20-year doubling reads as 3.53%. |
| Winner’s edge | | I after-tax − EE after-tax | | $827.09 for I Bonds at the defaults — the number to decide on. |
The math compounds annually; Treasury actually accrues interest monthly and compounds semiannually, so real redemption values differ by a few dollars. The I Bond rate resets every 6 months — the calculator holds your entered composite rate flat for the whole horizon, so for multi-year horizons enter the rate you expect on average, not today’s rate. The 3-month penalty is modeled as forfeiting 3 months at the entered rate; Treasury forfeits the last 3 months actually earned. The EE doubling is modeled as an exact 2× at 20 years; the real adjustment lands within a few dollars of double. The education tax exclusion is not modeled — the calculator prices the fully-taxable case. It models marginal federal rates only, not deductions or phaseouts. This is educational math, not tax or investment advice.
Bright Side Kit. "I Bonds vs EE Bonds: Who Wins in 2026? | Bright Side Kit." https://brightoolbox.com/i-bonds-vs-ee-bonds/ Accessed October 24, 2026.Data sources4.26% composite — a 0.90% fixed rate plus a 3.34% annualized inflation rate — for I Bonds issued May 1 through October 31, 2026 (U.S. Treasury / TreasuryDirect). The rate resets November 1, 2026; published forecasts expect it to rise (roughly 1.3% fixed / ~4.9% composite), but those are forecasts, not announced rates. The fixed portion you lock in at purchase stays with your bond for 30 years.
Every EE Bond issued since May 2005 is guaranteed to be worth at least twice its purchase price at 20 years. If the stated fixed rate (2.40% for May–Oct 2026 issues) would not get it there, the Treasury makes a one-time adjustment at the 20-year mark to reach double. Doubling in 20 years is a ~3.53% effective annual rate — the number the calculator uses for the 20-year EE result.
You cannot redeem either bond in the first 12 months — no exceptions for electronic bonds. Redeem before 5 years and you forfeit the last 3 months of interest (the penalty can never take you below your principal). After 5 years there is no penalty, and after 20 years the EE Bond has done its doubling.
Interest is exempt from state and local income tax under 31 U.S.C. §3124 — for both series. Federal tax is deferred until you redeem (or the bond matures at 30 years). If you use the proceeds for qualified higher-education expenses and your income is under the annual phase-out, the federal tax can be excluded entirely — a real edge for the college-saving use case.
$10,000 per person, per series, per calendar year in electronic bonds at TreasuryDirect — so $10,000 of I Bonds and $10,000 of EE Bonds. The old option to buy an extra $5,000 in paper I Bonds with your tax refund was discontinued after 2024; electronic purchases are now the only way in.
Buying before October 31, 2026 locks the 0.90% fixed rate for 30 years — the part of the I Bond that never changes. Waiting risks nothing on the inflation portion (it resets for everyone every 6 months) but bets that the new fixed rate rises as forecast (~1.3%). There is no free lunch: a higher fixed rate later is only better if you value the fixed floor more than the months of 4.26% you would earn now. Run both rates through the calculator before deciding.