Series I and Series EE savings bonds · Also called: I-bond, Series I, Series EE, savings bond
An I-bond earns a composite rate — a fixed rate plus an inflation rate — and its interest is exempt from state income tax; federal tax on the accrual is deferred until redemption.
Series I bonds pay a composite rate that combines a fixed rate (set at purchase, good for the bond's life) with a semiannual inflation rate. Series EE bonds pay a fixed rate and are guaranteed to double in value at 20 years if held that long.
The interest is exempt from state and local income tax (31 U.S.C. §3124), and federal tax on the accrual is deferred until the bond is redeemed. Redemption within the first 12 months is not allowed, and redeeming within five years forfeits the last three months of interest. RetIQ models the composite rate and the state exemption; it taxes the interest federally each year rather than deferring it, and does not model the redemption restrictions.