Both the interest and the principal increase on inflation-indexed bonds will be taxable annually. Since the increase in principal is taxed before the bond matures, some of the inflation protection is lost. Indexed bonds are auctioned quarterly on the 15th of January, April, July, and October. All bidders pay the same price. Treasury Bonds Treasury bonds are issued in 30-year maturities.
Interest is fixed and payable semiannually.
Another option is to buy free of charge through Treasury Direct. All Treasury securities are issued in book-entry form, which means the purchase is recorded electronically. Certificates are no longer issued. Click here to access order forms on the Treasury web site. To get started, request a Treasury Direct Kit.