How to calculate interest of a US Treasury TIPS?

Each US Treasury TIPS carries a fixed interest rate. Interests are paid out semi-annually on all US Treasury TIPS.

Here is how the semi-annual interest is calculated on a US Treasury TIPS:

$I=0.5\times r\times P_t$
$I=\text{Semi-Annual Interest}$
$r=\text{Interest Rate}$
$P_t=\text{Current Principal}$

The current principal value is calculated with the following formula:

$P_t={\displaystyle \frac{{\mathrm{CPI}}_t}{{\mathrm{CPI}}_o}}\times P_o$
$P_t=\text{Current Principal}$
$P_o=\text{Original Principal}$
${\mathrm{CPI}}_t=\text{Current Reference CPI}$
${\mathrm{CPI}}_o=\text{Original Reference CPI}$

For example, you bought $10,000.00 principal value of the 20-year TIPS originally issued on January 31, 2006, it started to earn interest on the dated date of January 15, 2006. So on January 15, 2025, you are getting a semi-annual interest of:

CUSIP: 912810FS2
Series: D-2028
Dated Date: 2006-01-15
Interest Rate: 2.00%
Original Principal: $10,000.00

Original Ref CPI on January 15, 2006: 198.47742
Current Ref CPI on January 15, 2025: 315.58677
Index Ratio: 315.58677 / 198.47742 = 1.5900386552788 = 1.59004

Current Principal: 1.59004 * $10,000.00 = $15,900.40
Interest: 0.5 * 2.00% * $15,900.40 = $159.00

If you hold a US Treasury TIPS, you can use our "Interest Calculator for US Treasury TIPS" to find its inflation adjusted principal and interest on each intereest payment date.

To get the reference CPI numbers and index ratios on January 15, 2025, please see the Bureau of the Fiscal Service's publication released on December 11, 2024.

⇒ Online Resources on US Treasury TIPS

⇐ Face Value Adjustment on US Treasury TIPS

⇑ US Treasury TIPS

⇑⇑ US Treasury Securities