How to Buy More than $10,000 in I Bonds Annually

In a world where the stock market is unpredictable and interest rates are rising, many investors are seeking a place to put their money that is as close to risk-free as possible — even if it means forgoing the chance for a bigger reward. One increasingly popular pick are I bonds, savings bonds issued by the U.S. government. These bonds are virtually risk-free and have a robust fixed interest rate. There is generally a $10,000 annual limit for purchasing I bonds, but there are a few ways to get around this limit. Before you invest, this is what to know about the I bonds limit loophole.

For more help working I bonds into your financial strategy, consider working with a financial advisor.

Understanding I Bonds

I bonds are issued by the federal government and carry a zero-coupon interest rate. Plus, they are adjusted each year for inflation. The variable return will sit at 3.98% through October 2025. Unlike other U.S. securities, these bonds are sold at face value. This means if you purchase a $100 bond, the price will be $100. The bond duration runs from one year to 30 years.

Interest is paid every month and compounds every six months. The following deadlines apply:

Within one year of purchase: You cannot cash the bond.
Within one year and five years of purchase: You can cash the bond but will forfeit the previous three months’ interest payments. This is known as early redemption.
After five years of purchase: You can cash the bond with no penalty.
After 30 years of purchase: The bond ceases to pay interest.

You do not have to cash the bond after 30 years, but it will start to lose value against inflation. Unfortunately, there is a limit to how much you can buy each year in these bonds. However, that does not mean you cannot get around that limit, though, depending on your situation.

How to Get Around the $10,000 I Bond Limit

An investor checks their trading account on their mobile app.

A $10,000 annual limit applies for purchases. However, there are some loopholes you can use to put even more money into these bonds.

1. Tax Refunds

If you are expecting to get a tax refund, you can use the money to purchase an additional $5,000 in I bonds.

However, they must be paper I bonds, not the more popular digital I bonds. While this adds a bit of complexity, you can eventually convert these paper bonds to digital ones later.

2. Buying for Multiple Members of the Family

The limit applies per person, so if you are married, each spouse is allowed to purchase $10,000 in I bonds (plus paper bonds if they have a tax return).

You can also purchase up to $10,000 in I bonds for your children, but they must be used for the child, possibly as a college savings tool.

3. Businesses and Trusts

Entities, such as businesses and trusts, can also purchase up to $10,000 in I bonds. This means that if you own a business and you have a living trust, you can purchase up to $30,000 in additional I bonds each year.

While any of these can increase the amount of I bonds you are able to buy, using multiple options together can help you maximize the number of bonds you are able to purchase.

Tax Treatment of I Bonds

One of the benefits of I bonds is their favorable tax treatment. The interest you earn on I bonds is subject to federal income tax, but it is exempt from state and local income taxes, making them especially attractive for investors in high-tax states. You can choose to pay the federal tax each year as the interest accrues, or you can defer it until you redeem the bond or it stops earning interest after 30 years.

There is also a potential education-related benefit. If you use I bonds to pay for qualified higher education expenses in the same year you redeem them, you may be able to exclude the interest from your federal income taxes entirely.

To qualify, the bonds must be registered in your name (or your spouse’s), and the student must meet certain requirements. This is called the Education Savings Bond Program, and it can make I bonds an even smarter choice for parents saving for college.

How to Buy I Bonds: Step-by-Step

Buying I bonds is a simple process, but it helps to know the steps in advance.

Most people purchase them through the U.S. Treasury’s online platform, TreasuryDirect.gov. First, create an account by providing your personal information and linking a bank account for funding and redemption. Once logged in, you can buy electronic I bonds in increments as small as $25, up to the annual limit of $10,000 per person.

If you want to use your tax refund to buy additional I bonds (up to $5,000), you must indicate this on your federal tax return. These are issued as paper bonds, which you can later convert to digital through TreasuryDirect if you wish.

When purchasing, be sure to designate the correct owner. You can buy bonds for yourself, your spouse, your child or even a trust or business entity. This flexibility is key if you are trying to maximize purchases through multiple eligible owners.

After purchase, your bonds will be held in your TreasuryDirect account, where you can track interest, designate beneficiaries and redeem them when you are ready.

Bottom Line

I bonds are a low-risk investment, which makes them very popular in times of market uncertainty when inflation devalues your cash. Although there is a $10,000 limit each year for purchase, there are several ways around this I bonds limit loophole, such as using your tax refund, having your spouse purchase bonds and using a separate legal entity like a trust. This can help you increase the amount of free money you are able to receive on these nearly risk-free investments.

A financial advisor can help determine a long-term investment strategy based on your financial goals and risk tolerance.

Investing Tips

For help using I Bonds as part of your strategy, consider working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Building a dividend stock portfolio is another way to use investments to create income.