U.S. savings bonds are low-risk investments issued directly by the Treasury Department that earn interest for up to 30 years and can be bought online for as little as $25. To understand how savings bonds work, start with the two flavors on offer: Series EE bonds pay a fixed rate and are guaranteed to double in value after 20 years, while Series I bonds pay a rate that combines a fixed component with an inflation adjustment reset every six months. Both are backed by the federal government, exempt from state and local income taxes, and purchased through the TreasuryDirect website.
Series EE Bonds
Series EE bonds lock in a fixed interest rate on the day you buy. That rate never changes for the life of the bond. For bonds issued from November 2025 through April 2026, the rate is 2.50%.1TreasuryDirect. EE Bonds
The rate is not the whole story. EE bonds carry a guarantee no other Treasury security offers: if the accumulated interest hasn’t already doubled the bond’s value by the 20-year mark, the Treasury adds enough money to make up the difference.1TreasuryDirect. EE Bonds That doubling works out to a minimum effective yield of roughly 3.5% per year over 20 years, regardless of the stated rate at purchase.
After the doubling, the bond keeps earning at its original fixed rate for another decade. Final maturity hits at 30 years, and at that point the bond stops earning entirely.1TreasuryDirect. EE Bonds
Series I Bonds
Series I bonds are built to keep pace with inflation. Their interest rate has two parts. The fixed rate stays the same for the life of the bond. The inflation rate is reset every May and November by the Treasury based on changes in the Consumer Price Index for All Urban Consumers.2TreasuryDirect. I Bonds Interest Rates The two combine into a composite rate that determines what the bond actually pays during each six-month cycle.
For I bonds issued from November 2025 through April 2026, the fixed rate is 0.90% and the semiannual inflation rate is 1.56%, for a composite rate of 4.03%.2TreasuryDirect. I Bonds Interest Rates Your composite rate will shift over time as inflation numbers change, but the fixed portion is yours forever. If inflation drops to zero, the bond still earns at least the fixed rate. Like EE bonds, I bonds reach final maturity at 30 years.
How Interest Accrues
Both series earn interest monthly. Every six months, the Treasury rolls that interest into your principal, so the next round of interest is calculated on the larger balance.3TreasuryDirect. Comparing EE and I Bonds The bond’s value updates on the first of each month in your TreasuryDirect account. Compounding builds slowly at first and picks up over a decade or two.
How to Buy a Savings Bond
All purchases happen through TreasuryDirect, the Treasury’s online portal. Opening an account requires a Social Security Number, an email address, and a U.S. bank account with routing number.4TreasuryDirect. Open an Account The system checks your identity against federal databases, so the legal name and address you enter should match what’s on file with your bank; mismatches can lock the account.
Once the account is live, pick a series, enter any amount from $25 up to $10,000 (down to the penny), and the funds pull from your linked bank account.5TreasuryDirect. Buying Savings Bonds The bond usually shows up in your holdings within a day or two.
Annual Purchase Limits
Each Social Security Number can buy up to $10,000 in electronic EE bonds and $10,000 in electronic I bonds per calendar year, so an individual can put up to $20,000 total into savings bonds annually by using both series.6TreasuryDirect. How Much Can I Spend/Own Children have the same per-person caps.
Paper Series I bonds used to be available through federal tax refunds using IRS Form 8888, up to $5,000 per year. That program ended on January 1, 2025. All savings bond purchases now go through TreasuryDirect electronically.7TreasuryDirect. Using Your Income Tax Refund to Buy Paper Savings Bonds
Who Can Be Named on a Bond
To appear on a savings bond, a person needs a Social Security Number and must be a U.S. citizen, U.S. resident, or civilian employee of the federal government. You can register a bond in your name alone, add a co-owner with equal rights to cash it, or name a beneficiary who inherits the bond at your death.5TreasuryDirect. Buying Savings Bonds
Cashing In a Savings Bond
You have to hold a savings bond for at least 12 months before you can redeem it.8TreasuryDirect. Cashing EE or I Savings Bonds After that, you can cash it any time through your TreasuryDirect account. Proceeds land in your linked bank account, usually within two to five business days.
There’s a penalty for cashing early. If you redeem before the bond has earned for five full years, you forfeit the last three months of interest.8TreasuryDirect. Cashing EE or I Savings Bonds On a bond held only 18 months, that clip is a meaningful chunk of the return. Hold five years or longer and no penalty applies.
The Treasury can waive the 12-month holding period if you live in an area under an official disaster declaration. For electronic bonds, call 844-284-2676. For paper bonds lost or damaged in the disaster, file FS Form 1048 with “DISASTER” written on the first page and on the envelope.9TreasuryDirect. Cashing Savings Bonds Affected by a Disaster
One thing to watch: bonds that sit past their 30-year final maturity date stop earning altogether. Cash them and put the money somewhere that still grows.
Taxes on Savings Bond Interest
Interest on savings bonds is subject to federal income tax but exempt from state and local income taxes.10TreasuryDirect. Tax Information for EE and I Bonds The default treatment is to defer reporting the interest until you cash the bond or it reaches final maturity, which usually works out well if you expect a lower tax bracket by redemption time. You can also elect to report interest each year as it accrues, which sometimes makes sense for bonds registered to a child whose annual income falls below the filing threshold. Once you pick a method, you’re supposed to stick with it; switching requires following IRS procedures.
The Education Exclusion
You can potentially exclude savings bond interest from federal tax entirely if you use the proceeds to pay for qualified higher education expenses like tuition and required fees. Room and board don’t count.11Internal Revenue Service. Form 8815 The exclusion carries several requirements:
- The bond must be a Series EE or I bond issued after 1989.
- You must have been at least 24 years old before the bond’s issue date. A bond bought by a parent in a young child’s name does not qualify.12Office of the Law Revision Counsel. 26 U.S. Code 135
- You cannot file as married filing separately.
- For 2026, the exclusion phases out between $101,800 and $116,800 of modified adjusted gross income for single filers, and between $152,650 and $182,650 for married couples filing jointly.13Internal Revenue Service. Internal Revenue Bulletin 2025-45
- The bonds must be cashed in the same tax year the qualified expenses are paid.
Claim the exclusion on IRS Form 8815 with your tax return. The expenses can be for you, your spouse, or a dependent.14TreasuryDirect. Using Bonds for Higher Education
Gifts, Inheritance, and Old Paper Bonds
You can buy a savings bond as a gift, and the Treasury holds it in a gift box inside your TreasuryDirect account until you’re ready to deliver it. Delivery requires the recipient’s TreasuryDirect account number, so they need their own account first. The bond counts against the recipient’s annual purchase limit, not yours, so it’s worth confirming they have room under their cap before you buy.15TreasuryDirect. FAQs About Undelivered Gift Bonds
When an owner dies, what happens depends on how the bond is registered. A surviving co-owner or a named beneficiary becomes the sole owner once they submit proof of death. If no co-owner or beneficiary is named, the bonds fall into the estate, and a legal representative handles them. For smaller estates where savings bonds total $100,000 or less and no formal probate is underway, a simplified voluntary representative process is available.16eCFR. 31 CFR Part 353 Subpart L
If you’re holding old paper bonds that were lost, stolen, or damaged, you can request replacement by filing FS Form 1048. When you don’t know the serial numbers and the bonds were issued in 1974 or later, the Treasury Hunt database may locate them for you.17TreasuryDirect. Get Help for Lost, Stolen, or Destroyed Bonds Replacements can be issued electronically to your TreasuryDirect account or cashed out.