[BrianL]

The I-bond interest rate is composed of two part, a fixed part that is same for the duration of the I-bond, 30 years, and rate determined by inflation over a 6 month period. The fixed rate is set by the treasury department November 1 and May 1 each year. All bonds purchased between November 1 and April 30 will have the same fixed rate as will all bonds purchased between May 1 and October 31. The inflation rate is based on the unadjusted CPI and is set November 1 and May 1. The November 1 inflation rate (ir) is equal to percentage increase in the unadjusted CPI from April through September and the May ir is determined by the percentage increase in the unadjusted CPI from October through March.

The I-bond interest rate is composed of the fixed rate (fr) when the bond was purchased combined with the inflation rate in the following manner:
I-bond rate = fr+fr*ir+2*ir
The i-bond ir changes every 6 months, as described above. When you initially purchase an I-bond it will have the fr and ir associated with date you purchase the I-bond. It's ir will change every 6 month. So if you purchase an I-bond in December, its interest rate will change every December and June.

Taxes on I-bonds are deferred until you cash in the bond. I-bond interest is exempt for state and local income taxes.