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The basic problem with I-bonds is the fixed component of 1.4% is so far below market rates (compare to about 2.4% on TIPS) the delay on federal income tax will not make up for the low rate under any but extreme circumstances.

A not-so-extreme exception to this is if you plan to use the I-bonds for educational purposes, in which case the interest may be tax-free. TIPS don't have this provision.

I think this may go a long way toward explaining the rate gap.

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