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TREASURY SECURITIES & PROGRAMS

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Comparison of TIPS and Series I Savings Bonds

TIPS I-Bonds
Type of Investment Marketable--can be bought and sold in the secondary securities market Non-marketable - cannot be bought or sold in secondary securities market. Registered in names of individuals and some entities, including trusts, estates, corporations, partnerships, etc. See Learn More about Entity Accounts for full information on the entity registration types.
How to buy At auction through TreasuryDirect, or through banks, brokers, and dealers. Electronic: Anytime online from TreasuryDirect. Paper: available only using your tax refund.
Purchase Limits Auction: Non-competitive bidding:up to $5 million - Competitive bidding - up to 35% of offering amount Electronic: $10,000 per Social Security number per calendar year. Paper (through tax refunds): $5,000 per Social Security number per calendar year.
Par Amount/Face Amount Minimum purchase is $100. Increments of $100. Electronic: Purchased in amounts $25 or more, to the penny. Paper (through tax refunds): Offered in 6 denominations ($50, $100, $200, $500, $1,000, $5,000).
Inflation Indexing Inflation adjustments measured by CPI-U published monthly Semiannual inflation rate (based on CPI-U changes) announced in May and November.
Discounts/ Face Amount Price and interest determined at auction. Electronic I Bonds - purchased in amounts of $25 or more, to the penny. Paper bonds (through tax refunds) issued at face amount (A $100 I-Bond costs $100.)
Earnings Rates Principal increases/decreases with inflation/deflation. Interest calculations are based upon adjusted principal. Fixed interest rate. Earnings rate is a combination of the fixed rate of return, set at the time of purchase, and a variable semiannual inflation rate.
Interest Semiannual interest payments are based on the interest rate set at auction. Inflation-adjusted principal is used to calculate the  interest amount Interest accrues over the life of the bond and is paid upon redemption
Tax Issues Semiannual interest payments and inflation adjustments that increase the principal are subject to federal tax in the year that they occur, but are exempt from state and local income taxes. Tax reporting of interest can be deferred until redemption, final maturity, or other taxable disposition, whichever occurs first. Interest is subject to federal income tax, but exempt from state and local income taxes. Interest can also be claimed annually.
Life Span TIPS are issued in terms of 5, 10, and 30 years. Earn interest for up to 30 years.
Disposal before maturity Can be sold prior to maturity in the secondary market. Redeemable after 12 months with three months interest penalty. No penalty after 5 years.