How to Buy Savings Bonds for a Child: Limits and Taxes

To buy savings bonds for a child, open a TreasuryDirect account in your own name, create a linked minor account registered to the child’s Social Security Number, and purchase Series EE or Series I bonds electronically through BuyDirect. As of January 2025, electronic bonds through TreasuryDirect.gov are the only way to buy new U.S. savings bonds; the paper bond option tied to tax refunds has been eliminated.¹ The whole process takes about 15 minutes, and bonds start at $25.

What You Need Before You Start

Both you and the child have to be eligible owners. Ownership is limited to U.S. residents, U.S. citizens living abroad, and civilian or military employees of the federal government regardless of where they live.² A nonresident alien can be named as a co-owner or beneficiary but cannot be the primary owner of a new bond.

Have these ready before you log in:

The child’s Social Security Number. Securities in a minor account are registered under the child’s name and SSN.³
Your own Social Security Number, for the primary account.
A U.S. bank account routing and account number to fund purchases.

One rule catches people off guard. Under federal regulations, a minor cannot buy securities directly. An adult custodian — a parent or the person who provides the child’s chief financial support — must handle every transaction on the child’s behalf.³

Set Up a Linked Minor Account

A child under 18 cannot hold a standalone TreasuryDirect account. The child’s account is linked to the custodian’s primary account, and the custodian reaches it through their own login.⁴ The child is the legal owner of the bonds; the custodian controls purchases, redemptions, and registration on the child’s behalf.³

To create the linked account:

Log in to your TreasuryDirect account. If you don’t have one yet, register at TreasuryDirect.gov first.
Go to the ManageDirect tab and select the option to open a minor linked account.
Enter the child’s full legal name and Social Security Number.
Certify that all transactions will be on the child’s behalf. The custodian acts as fiduciary for the minor.³

The system generates an account number for the child. There are no separate login credentials; the minor account appears as a linked account inside your dashboard and is ready for purchases right away.

Buy the Bond in the Child’s Account

With the linked account in place, buying a bond takes a few clicks:

Select BuyDirect from the main navigation menu.
Choose the bond type, Series EE or Series I, and click Submit.
Designate the child’s linked account as the registration owner.
Enter the dollar amount. Any amount from $25 to $10,000 works, down to the penny. A $75.38 bond is perfectly valid.⁵
Select your bank account for the electronic funds transfer and confirm.

The money is debited from your bank account and the bond appears in the child’s linked account.

When registering, you can list a beneficiary using a Payable on Death (POD) designation, or name a secondary owner. The beneficiary must be an individual, not an organization or trust.⁶ A POD registration means that if the child dies, the named beneficiary automatically becomes the sole owner.

Buying a Bond as a Gift

If you’re buying for a grandchild, niece, nephew, or any child not linked to your account, there’s an extra step. Both you and the child’s custodian must have TreasuryDirect accounts, and the child must have a linked minor account under their custodian’s primary account.⁷

You will need the child’s full name, Social Security Number, and TreasuryDirect account number. Purchase the bond through BuyDirect as usual, but designate it as a gift. It lands in your Gift Box, a holding area in your account, and sits there for at least five business days while the payment clears.⁷

After the five-day hold, go to the Gift Box tab, select the bond, click deliver, and enter the recipient’s TreasuryDirect account number. The bond transfers out of your account and into the child’s, and Treasury emails the recipient or their custodian a confirmation. Until you deliver it, the bond stays in your Gift Box and the child gets no benefit from it.⁸

Annual Purchase Limits

Each Social Security Number is capped at $10,000 in Series EE electronic bonds and $10,000 in Series I electronic bonds per calendar year. The limit applies to the SSN of the person named as the bond’s owner, meaning the child’s SSN, not yours.⁹ Bonds you buy in the child’s linked account count against the child’s cap, not yours.⁵ A child could in theory receive up to $20,000 in new savings bonds in a single year, $10,000 of each series. The $25 floor makes it just as easy to start small.

EE Bonds vs. I Bonds for a Child

Series EE and Series I bonds work differently, and the right pick depends on how long you expect the money to sit.

Series EE

EE bonds earn a fixed interest rate set at purchase. Bonds issued between November 2025 and April 2026 pay 2.50%. The long-term draw is a Treasury guarantee that an EE bond will double in value at the 20-year mark, even if the stated rate wouldn’t otherwise get it there. That guarantee works out to about 3.5% annually if you hold the full 20 years. EE bonds keep earning interest for 30 years total.⁹

Series I

I bonds earn a composite rate that combines a fixed rate locked in at purchase with a variable inflation rate that adjusts every six months. For bonds issued November 2025 through April 2026, the composite rate is 4.03%, built from a 0.90% fixed rate and a 1.56% semiannual inflation adjustment.¹⁰ The inflation component resets every May and November based on changes in the Consumer Price Index. I bonds also earn interest for 30 years.

For a child’s long-term savings, each type has a case. EE bonds reward patience with the 20-year doubling guarantee. I bonds protect purchasing power against inflation, which can matter over the 12 or 15 years between birth and college. Many families buy some of each.

When the Money Can Come Out

You cannot cash a savings bond, EE or I, during the first 12 months after purchase.¹¹ The money is locked in for that first year with no exceptions.

If you redeem between one and five years after purchase, you forfeit the last three months of interest as a penalty.¹² The redemption value will never fall below what you paid; the penalty only reduces the interest earned. After five years, there is no penalty.

For bonds in a minor’s linked account, the custodian handles redemption on the child’s behalf, and Treasury reports the interest under the child’s name and Social Security Number.³

Taxes on a Child’s Savings Bonds

Savings bond interest is subject to federal income tax but exempt from state and local income taxes. You have two choices for timing: defer the interest until the bond is redeemed or reaches maturity, or elect to report it annually as it accrues.¹³ Most people defer, which means no tax is owed until the child actually cashes the bond.

Kiddie Tax

Because the bond is registered under the child’s SSN, the interest counts as the child’s unearned income. If a child’s total unearned income exceeds $2,700 in a year, the excess may be taxed at the parent’s marginal rate rather than the child’s, under what is commonly called the kiddie tax. While interest is being deferred, this rarely matters. It becomes relevant in the year the bond is cashed, when years of accumulated interest hit at once. A parent can elect to report a child’s unearned income on their own return using IRS Form 8814 if the child’s gross income is under $13,500.¹⁴

The Education Exclusion Catch

You may have heard that savings bond interest can be tax-free when used for college. It can, but there is a catch that trips up almost everyone who buys bonds in a child’s name: the bond owner must have been at least 24 years old when the bond was issued.¹⁵ A bond registered in a child’s name will almost never qualify.

To use the education exclusion, the parent should own the bond and can list the child as a beneficiary. When the parent later cashes the bond and uses the proceeds for the child’s qualified education expenses, which include tuition and required fees at an eligible institution or contributions to a 529 plan or Coverdell ESA, the interest can be excluded from income. Room and board do not qualify.¹⁵

The exclusion phases out at higher incomes. For 2025, the phase-out begins at $99,500 of modified adjusted gross income for single filers and $149,250 for joint filers, with the exclusion disappearing entirely at $114,500 and $179,250.¹⁵ These thresholds adjust annually; check Publication 970 for the year you plan to redeem. Only Series EE bonds issued after 1989 and all Series I bonds qualify.

If college is the main reason you’re buying, buy the bond in the parent’s own account and name the child as beneficiary. If the goal is a gift the child owns outright, the minor account is the right structure, and the education exclusion simply won’t be on the table.

What Happens When the Child Turns 18

Once the minor reaches 18, the custodian’s control narrows. The only transactions the custodian can still make are purchasing new securities and transferring the bonds out of the linked account into an account under the child’s name.³

To hand the account off, the child, now a legal adult, opens their own primary TreasuryDirect account. The custodian then goes to ManageDirect, selects the de-link option, and transfers the bonds into the child’s new account. The linked minor account is deactivated permanently.¹⁶ The child can also ask Treasury to transfer the securities directly if the custodian hasn’t done so.

Nothing moves automatically on the 18th birthday. Someone has to initiate the transfer, and until it happens, the custodian cannot redeem bonds or make other changes beyond purchases and transfers. That gap can leave the account in limbo if the new adult account isn’t set up in time.

1
TreasuryDirect. Using Your Income Tax Refund to Buy Paper Savings Bonds
2
eCFR. 31 CFR 353.6 – Restrictions on Registration
3
eCFR. 31 CFR 363.27 – What Do I Need to Know About Accounts for Minors
4
eCFR. 31 CFR 363.10 – What Is a TreasuryDirect Account
5
TreasuryDirect. Buying Savings Bonds
6
TreasuryDirect. Registering Your Savings Bonds
7
TreasuryDirect. Giving Savings Bonds as Gifts
8
TreasuryDirect. FAQs About Undelivered Gift Bonds
9
TreasuryDirect. EE Bonds
10
TreasuryDirect. I Bonds Interest Rates
11
TreasuryDirect. I Bonds
12
eCFR. 31 CFR 359.7 – If I Redeem a Series I Savings Bond Before Five Years After the Issue Date, Is There an Interest Penalty
13
Internal Revenue Service. Topic No. 403, Interest Received
14
Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax)
15
Internal Revenue Service. Publication 970, Tax Benefits for Education
16
TreasuryDirect. User Guide Sections 121 Through 130