How Do Series EE Bonds Work: The Doubling Guarantee and Taxes

Series EE savings bonds work by paying a fixed interest rate set at purchase, compounded semiannually, and backed by a U.S. Treasury guarantee that the bond will be worth at least double what you paid after 20 years. You buy them electronically at face value through TreasuryDirect for as little as $25, up to $10,000 per Social Security Number each calendar year, and you can cash them any time after 12 months. Interest is exempt from state and local income tax and, in some cases, from federal tax as well if the money pays for higher education.

The Interest Rate and How It Compounds

Every EE bond issued since May 2005 earns a single fixed rate that the Treasury announces before you buy. That rate is locked in for the life of the bond, up to 30 years, no matter what happens to market rates later.¹ For bonds issued from November 2025 through April 2026, the fixed rate is 2.50%.²

Interest is credited on the first day of each month and compounds semiannually, so the interest earned in one six-month period starts earning its own interest in the next.¹ Nothing gets paid out along the way. All the earnings stay locked inside the bond until you redeem it or it hits final maturity.

The 20-Year Doubling Guarantee

The defining feature of an EE bond is the Treasury’s promise that it will be worth at least twice its purchase price on its 20th anniversary. If the fixed rate is too low to get there through normal compounding, the Treasury makes a one-time adjustment on that anniversary date to bring the value up to double.³ The guarantee applies to any EE bond issued since June 2003.⁴

Doubling in 20 years works out to an effective annual return of roughly 3.5%. At the current 2.50% rate, compounding alone won’t get there, so anyone buying today can expect the Treasury to add the difference at the 20-year mark. When the fixed rate is 3.5% or higher at purchase, the bond reaches double value on its own and no top-up is needed.

What Happens After 20 Years and at Final Maturity

After the doubling event, the bond keeps earning the original fixed rate for another 10 years, unless the Treasury announces a different rate for that extended period.¹ Total lifespan is 30 years from the issue date, and interest stops accruing entirely once those 30 years are up.³

When an electronic EE bond hits final maturity, the Treasury automatically pays the full value into your linked bank account. Paper bonds that reach 30 years have to be submitted for payment. Any bond held past 30 years is just sitting idle, so it’s worth checking issue dates on older paper bonds you may still have.

How to Buy EE Bonds

EE bonds are sold only through TreasuryDirect at treasurydirect.gov. To open an account you need a valid Social Security Number, a U.S. address, a checking or savings account for transfers, and a working email address. The Treasury may require password protection and additional authentication.⁵

Once your account is open, you can buy in any amount from $25 up, specified to the penny. The annual limit is $10,000 per Social Security Number per calendar year.³ Bonds are sold at face value, so $100 buys a $100 bond on day one.⁶ Paper EE bonds are no longer offered.

Choosing How the Bond Is Registered

At purchase you pick who owns the bond. You can list yourself alone, add a co-owner, or name a beneficiary. With a co-owner (labeled “WITH” on the bond), two people share ownership and the survivor becomes sole owner if one dies; on an electronic bond, the first name listed is the primary owner and controls the account. With a beneficiary (labeled “POD,” payable on death), you keep full control while alive and only you can cash the bond or change the beneficiary, but at your death the bond passes directly to the person you named instead of going through your estate. Co-owners and beneficiaries must be individual people, not businesses.⁷

Buying EE Bonds as Gifts or for a Child

You can buy an EE bond for someone else through TreasuryDirect by entering their name and Social Security Number, naming them as owner, and checking the “This Is A Gift” box. The bond sits in a Gift Box in your account for at least five business days before you can deliver it, and the recipient needs their own TreasuryDirect account to receive it. Until they do, the bond just stays in your Gift Box.⁸

For a recipient under 18, a parent or primary financial supporter first opens a Minor Linked Account inside their own TreasuryDirect account and acts as custodian, handling purchases and redemptions for the child. The custodian cannot buy gift bonds from the minor’s account. Once the child turns 18, the custodian’s access narrows: they can still buy new bonds and transfer existing ones, but the young adult can open a primary account and request the bonds be moved into it.⁹

The $10,000 annual cap follows the owner’s Social Security Number, not the buyer’s. Gift bonds count against the recipient’s yearly limit, not yours.

Cashing In an EE Bond

An EE bond has to be held at least 12 months before it can be redeemed.¹⁰ The 12 months run from the issue date, not from any later delivery date if the bond was a gift.¹¹

Cash an EE bond before it turns five years old and you lose the last three months of interest. The penalty can’t push the value below what you originally paid.¹² After the five-year mark there is no penalty and you get your principal plus all the interest earned. To redeem an electronic bond, log into TreasuryDirect, select the bond, and send the proceeds to your linked bank account; the transfer typically clears within a couple of business days.

Paper EE bonds you still hold can often be cashed at a bank or credit union, though institutions aren’t required to redeem them, especially for non-customers. Bring photo ID and sign the bond in front of the teller rather than beforehand.¹³

Federal Tax Rules on the Interest

EE bond interest is taxable at the federal level but exempt from state and local income taxes.¹⁴ That state-tax break can meaningfully lift your after-tax return in a high-tax state.

You have two ways to report the interest to the IRS. Most people defer, reporting all the interest in the year the bond is cashed or reaches final maturity, whichever comes first. The alternative is to report interest each year as it accrues, even though no cash has changed hands. Whichever method you pick applies to all your savings bonds. When you cash a bond, TreasuryDirect posts a 1099-INT to your account by January 31 of the following year.¹⁵

The Education Interest Exclusion

You may be able to exclude EE bond interest from federal income tax entirely if you use the redemption proceeds for qualified higher education expenses — tuition and required fees at an eligible college, university, or vocational school. Room and board don’t count. Proceeds rolled into a Coverdell Education Savings Account or a 529 plan also qualify.¹⁶

To claim the exclusion, you have to meet every one of these tests:

You were at least 24 years old when the bond was issued.
You are not filing as married filing separately.
You paid qualified education expenses in the same tax year for yourself, your spouse, or a dependent.
Your modified adjusted gross income is under the annual limit. For 2026, the exclusion begins phasing out at $101,800 for single filers ($152,650 for joint filers) and phases out completely at $116,800 ($182,650 for joint filers).

You claim the exclusion on IRS Form 8815 with your tax return.¹⁷ One key limit: bonds registered in a child’s name don’t qualify. The person claiming the exclusion has to be the bond’s owner (or the owner’s spouse on a jointly registered bond), not the student.

What Happens When the Owner Dies

If the bond was registered with a co-owner or a POD beneficiary, the survivor automatically becomes the sole owner. No probate is required. The survivor contacts TreasuryDirect, or submits the paper bond along with a certified death certificate, to update the registration.⁷

With no co-owner or beneficiary named, the bond becomes part of the estate. If the total redemption value of the deceased’s Treasury securities is $100,000 or less and no court administration is happening, a qualifying family member can act as a “voluntary representative” and submit everything to the Treasury in a single transaction. Larger estates and those already in probate move the bonds through the executor.¹⁸

Who pays tax on the accumulated interest depends on what the original owner did. If they reported interest annually while alive, the heir owes tax only on what accrues after the date of death. If they deferred (the usual choice), the executor can either report all the pre-death interest on the deceased’s final return or pass the full tax liability to the heir or estate. When the executor makes no election, the heir eventually owes federal tax on the entire interest — pre-death and post-death — in the year the bond is cashed or reaches maturity.¹⁹

1
eCFR. 31 CFR Part 351 Subpart B – Maturities, Redemption Values, and Investment Yields of Series EE Savings Bonds
2
TreasuryDirect. Fiscal Service Announces New Savings Bonds Rates
3
TreasuryDirect. EE Bonds
4
TreasuryDirect. EE Bonds May 2005 and Later
5
eCFR. Regulations Governing Securities Held in TreasuryDirect
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Investor.gov. Savings Bonds
7
TreasuryDirect. Registering Your Savings Bonds
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TreasuryDirect. How to Buy Gift Savings Bonds in TreasuryDirect
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eCFR. 31 CFR 363.27 – Accounts for Minors
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TreasuryDirect. Cashing EE or I Savings Bonds
11
TreasuryDirect. Minimum Holding Period for Savings Bonds Extended to 12 Months
12
eCFR. 31 CFR Part 351 – Offering of United States Savings Bonds, Series EE
13
Federal Reserve Financial Services. Savings Bond Redemptions Frequently Asked Questions
14
eCFR. 31 CFR Part 351 – Offering of United States Savings Bonds, Series EE – Appendix: Tax Considerations
15
TreasuryDirect. Tax Information for EE and I Bonds
16
TreasuryDirect. Using Bonds for Higher Education
17
Internal Revenue Service. Form 8815 – Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
18
TreasuryDirect. Non-Administered Estates
19
Internal Revenue Service. Chief Counsel Advice Memorandum on Testamentary Transfer of Series EE Savings Bonds