We sell TIPS for a term of 5, 10, or 30 years.
As the name implies, TIPS are set up to protect you against inflation.
Unlike other Treasury securities, where the principal is fixed, the principal of a TIPS can go up or down over its term.
When the TIPS matures, if the principal is higher than the original amount, you get the increased amount. If the principal is equal to or lower than the original amount, you get the original amount.
TIPS pay a fixed rate of interest every six months until they mature. Because we pay interest on the adjusted principal, the amount of interest payment also varies.
You can hold a TIPS until it matures or sell it before it matures.
TIPS at a Glance
| Now issued in | Electronic form only |
|---|---|
| Matures in | 5, 10, or 30 years |
| Interest rate | The rate is fixed at auction and is never less than 0.125%. Treasury TIPS auction rules allow for negative real yield bids. See "Information on Negative Rates and TIPS" The amount you get is based on the principal at the time of each interest payment and the principal can go up or down. See Results of recent TIPS auctions. For more information, also see our page on the daily index ratio for TIPS. |
| Interest paid | Every six months until maturity |
| Minimum purchase | $100 |
| In increments of | $100 |
| Maximum purchase | $10 million (non-competitive bid) 35% of offering amount (competitive bid) (See Buying a Treasury marketable security for information on types of bids.) |
| Auction frequency | 5-year TIPS
|
| Taxes | Federal tax due each year on interest earned. Any increase or decrease in the principal during the year may affect your federal taxes. No state or local taxes |
| Eligible for STRIPS? | Yes |
How TIPS protects you against inflation
The principal (called par value or face value) of a TIPS goes up with inflation and down with deflation.
When a TIPS matures, you get either the increased (inflation-adjusted) price or the original principal, whichever is greater. You never get less than the original principal.
Also, see our page on "Comparing TIPS and Series I Savings Bonds".
How and when we adjust TIPS for inflation
We adjust the principal of your TIPS using this version of the Consumer Price Index from the Bureau of Labor Statistics.
You can use our page on the daily index ratios to see how your TIPS principal is changing.
