About the TIPS Calculator
Treasury Inflation-Protected Securities (TIPS) are US Treasury bonds whose principal rises and falls with the Consumer Price Index (CPI-U). The coupon rate is fixed at auction, but interest is paid every six months on the inflation-adjusted principal, so the dollar amount of each payment grows with inflation. This TIPS calculator projects the adjusted principal, each semiannual interest payment and the total you receive at maturity for an assumed inflation rate.
It is for investors comparing TIPS with nominal Treasuries, building an inflation-protected bond ladder, or checking what a TIPS holding is worth today. Switch to “From index ratio” mode and enter the reference CPI on the dated date and on a later date (both are published by the Treasury for every TIPS issue) to get the inflation-adjusted principal, with the index ratio rounded to five decimals as the Treasury does, and the interest payment for that date.
Projection mode assumes you hold a TIPS bought at par from issue to maturity and that inflation runs at a steady annual rate. At maturity you receive the greater of the inflation-adjusted principal or the original face value, so sustained deflation cannot reduce what you get back below par. Federal tax on the yearly inflation adjustment (“phantom income”) and market price changes before maturity are not modelled. Product rules (5-, 10- and 30-year terms, $100 minimum, deflation floor) reflect TreasuryDirect as of 2026.
With the default inputs, the inflation-adjusted principal is $12,800.85. Change any value above to recalculate instantly.
How to use the tips calculator
- 1Choose projection mode to model future inflation, or index-ratio mode to value a bond you hold.
- 2Enter the original principal and the fixed coupon rate of the TIPS.
- 3In projection mode, enter an assumed inflation rate and the term.
- 4In index-ratio mode, enter the reference CPI for the dated date and for the valuation date from TreasuryDirect.
- 5Review the adjusted principal, interest payments and the schedule of semiannual payments.
Formula and method
The Treasury adjusts TIPS principal with an index ratio: the reference CPI for a given day divided by the reference CPI on the bond’s dated date. The reference CPI for the first day of a month is the non-seasonally adjusted CPI-U for the third preceding month, and values for other days are interpolated linearly. The Treasury truncates the index ratio to six decimals and rounds it to five. Each semiannual interest payment is half the fixed annual coupon rate multiplied by the inflation-adjusted principal on the payment date.
In projection mode the calculator replaces the reference CPI with a steady assumed inflation rate, so the index ratio after k half-years is (1 + inflation)^(k/2). At maturity you receive the larger of the adjusted principal or the original face value. The nominal-yield equivalent uses the Fisher relationship (1 + real) × (1 + inflation) − 1 and assumes the bond was bought at par.
- Ref CPI
- Reference CPI-U (three-month lag, interpolated daily)
- Face
- Original principal (par value) of the TIPS
- coupon
- Fixed annual coupon (real) rate set at auction
- k
- Number of half-year periods since issue
Worked examples
$10,000 10-year TIPS at 1.875% with 2.5% inflation
At 2.5% a year, prices rise by a factor of 1.025^10 = 1.28008, so the $10,000 principal grows to $12,800.85. The last semiannual payment is 1.875% ÷ 2 of that, about $120.01, and the 20 payments total $2,139.94 for $14,940.79 received in all.
Deflation scenario: 5-year TIPS, −1% a year
Five years of 1% deflation shrinks the adjusted principal to $9,509.90, and interest is paid on that smaller amount ($608.03 in total). At maturity the deflation floor applies, so you get back the full $10,000.
Valuing a holding from the index ratio
The index ratio is 315.6 ÷ 296.4 = 1.06478, rounded to five decimals as the Treasury does, so $10,000 of original principal is now $10,647.80 of adjusted principal. An interest payment on that date would be $10,647.80 × 2.125% ÷ 2 = $113.13.
Frequently asked questions
How do TIPS adjust for inflation?+
The principal is multiplied by an index ratio based on the CPI-U published by the Bureau of Labor Statistics. When the CPI rises the principal rises, and because the fixed coupon is applied to that larger principal, the interest payments rise too.
What happens to TIPS if there is deflation?+
Deflation lowers the adjusted principal and therefore the interest payments. At maturity, however, the Treasury pays the greater of the inflation-adjusted principal or the original principal, so you never get back less than face value if you hold to maturity.
How often do TIPS pay interest?+
TIPS pay interest every six months until maturity. Each payment equals half the fixed annual coupon rate multiplied by the inflation-adjusted principal on the payment date.
What terms are TIPS sold in and what is the minimum?+
The Treasury sells TIPS with terms of 5, 10 and 30 years, in increments of $100 with a $100 minimum, through TreasuryDirect or a bank or broker. Older issues trade on the secondary market with any remaining term.
Are TIPS inflation adjustments taxable?+
Yes. For federal income tax, the yearly increase in principal is generally taxable in the year it occurs even though you do not receive it until maturity, often called phantom income. TIPS interest is exempt from state and local income tax. Holding TIPS in an IRA avoids the phantom-income issue.
What is the TIPS breakeven inflation rate?+
Breakeven inflation is the yield on a nominal Treasury minus the real yield on a TIPS of the same maturity. If actual inflation averages more than the breakeven, the TIPS would have done better than the nominal bond.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.