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Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.

TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.

You can buy TIPS from us in TreasuryDirect. You also can buy TIPS through a bank or broker. (We no longer sell TIPS in Legacy Treasury Direct, which we are phasing out.)

You can hold a TIPS until it matures or sell it before it matures.

Use TIPS to:

Diversify your investment portfolio

Supplement retirement income

Original Issue Rate: The yield determined at auction.

See rates in recent auctions Minimum purchase: $100 Maximum Purchase

(in a single auction): Non-competitive: $5 million

Competitive: 35% of offering amount

(See types of bidding in "Auctions in Depth") Investment Increment: Multiples of $100 Issue Method: Electronic

Rates & Terms

TIPS are issued in terms of 5, 10, and 30 years.

TIPS Inflation Index Ratios can be used to calculate the inflation adjustment to principal on previously issued TIPS.

TIPS can be held until maturity or sold before maturity.

Redemption Information

Minimum Term of Ownership: In TreasuryDirect, 45 days.

In TreasuryDirect, 45 days. Interest Earning Period: To maturity

Tax Considerations

Interest income and growth in principal are exempt from state and local income taxes.

Interest income and growth in principal are subject to federal income tax.

TIPS-Related FAQs

What happens to TIPS if deflation occurs?

What are the maturity terms for TIPS?

How do I know when TIPS will be auctioned?

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