How to Redeem I Bonds: Steps, Taxes, and Education Exclusion

To redeem I Bonds, log in to TreasuryDirect and cash electronic bonds online, or take paper bonds to a bank where you have an account (or mail them to the Treasury with FS Form 1522). You cannot cash any I Bond during the first 12 months after issue, and if you cash before five years you forfeit the last three months of interest. After five years, you get the full accumulated value with no penalty.

When You Can Cash an I Bond

For bonds issued on or after February 1, 2003, the minimum holding period is 12 months from the issue date. Bonds issued on or before December 1, 2002, had a six-month minimum, but very few of those remain in circulation.¹

Redeem before the five-year mark and the Treasury cuts three months of interest from your payout. Cash a bond nine months in and you walk away with six months of interest. The penalty never drops the bond’s value below what you paid; you simply earn less. Past five years, there is no penalty at all.¹

Check What the Bond Is Worth First

For paper bonds, use the Treasury’s free Savings Bond Calculator. Enter the series, denomination, and issue date, and it returns the current redemption value with any early-redemption penalty already applied.² For electronic bonds, TreasuryDirect displays the current value inside your account, and that figure already reflects the three-month penalty on bonds under five years old.³

How to Cash Electronic I Bonds

Electronic redemptions happen entirely on TreasuryDirect. Log in, click the ManageDirect tab, then under “Manage My Securities” select “Redeem securities.” Pick the bond or bonds you want to cash. You can redeem up to 50 securities in a single transaction.⁴

If you are cashing a single bond, you can take the full amount or a partial amount. Partial redemptions must be at least $25, and you must leave at least $25 of value behind in the bond.⁵ Multiple bonds in one transaction must each be redeemed in full, and all proceeds go to the same bank account. After you pick a destination account and confirm, funds usually land in your linked bank account within two business days.⁴

How to Cash Paper I Bonds

The easiest route for paper bonds is a bank or credit union where you already have an account. Bring the bond and a valid government-issued photo ID such as a driver’s license or passport. Most banks will process the redemption on the spot for an established customer and deposit the proceeds into your account.

If your bank will not cash it, mail the bond to the Treasury with a completed FS Form 1522, “Special Form of Request for Payment of United States Savings and Retirement Securities.”⁶ The form asks for your name, mailing address, Social Security Number, the bond’s serial number and issue date, and the bank account where you want the proceeds deposited.

When the total value being redeemed is more than $1,000, you must sign FS Form 1522 in front of a certifying officer, typically available at banks, credit unions, or through a notary public. That certification verifies your identity.⁶ Make sure the name on the form matches the name on the bond exactly, and double-check your routing and account numbers. Use a trackable shipping method. Treasury processing typically takes several weeks after the package arrives.

If the Paper Bond Is Lost, Stolen, or Destroyed

You can still be paid. The Treasury handles these cases through FS Form 1048. If you know the serial number, use the standard form. If you don’t and the bond was issued in 1974 or later, run the Treasury Hunt tool on TreasuryDirect; if it finds a match, it produces a special version of FS Form 1048 that must be signed in front of a notary or certifying officer. For bonds issued before 1974, a separate version is available even without serial numbers.⁷ Mail the completed form to the address printed on it, and the Treasury will either replace the bond or pay it out.

Cashing a Bond After the Owner Has Died

Who can redeem the bond depends on how it was registered.

Co-owner bonds: if one co-owner has died, the surviving co-owner becomes sole owner and can request payment or reissue by providing proof of death.⁸
Beneficiary bonds: if the owner dies and a named beneficiary survives, the beneficiary becomes sole owner on proof of the owner’s death.⁸
Sole owner with no beneficiary: the bond falls into the estate and is handled through estate settlement.

For small estates not going through formal probate, FS Form 5336 lets a voluntary representative request payment without court involvement, but only if the total value of the deceased person’s Treasury securities is $100,000 or less at the time of death. The voluntary representative must be a surviving spouse, blood relative, or legally adopted child of the deceased, and must be at least 18. The form cannot be used to move bonds into a trust.⁹

Federal Tax on the Interest

Interest on I Bonds is subject to federal income tax and exempt from state and local income taxes.¹ Federal estate and gift taxes and state inheritance taxes also apply, but no other state or local taxes do.

Most holders defer reporting the interest until they actually receive it, either when they cash the bond or when it reaches final maturity at 30 years. In the year you receive the interest, the Treasury issues IRS Form 1099-INT showing the total earned.¹⁰ If you hold electronic bonds, you can download that 1099-INT from your TreasuryDirect account early in the following year and report the interest on your federal return for the year shown on the form.

You can instead report interest each year as it accrues, but that election applies to all savings bonds tied to your Social Security Number, and in the year you switch you must report all previously accrued but unreported interest on those bonds.¹⁰

Using I Bonds for Education to Skip the Tax

You may be able to exclude I Bond interest from federal income tax entirely if you use the proceeds for qualified higher education expenses. The exclusion covers tuition and required fees at eligible colleges, universities, and vocational schools, and contributions to a 529 plan or Coverdell Education Savings Account. Room and board do not qualify.¹¹

Two conditions had to be true when you originally bought the bond:

You were at least 24 years old when the bond was issued.
The bond is registered in your name, or jointly with your spouse. A bond registered in a child’s name does not qualify, even if the child later attends college.¹²

The exclusion also phases out at higher incomes. For 2026, it begins to phase out at a modified adjusted gross income of $101,800 for single filers and $152,650 for married couples filing jointly, and disappears entirely at $116,800 for single filers and $182,650 for joint filers.¹³ Claim the exclusion by filing IRS Form 8815 with your tax return for the year you redeem the bonds.

1
eCFR. 31 CFR Part 359 Offering of United States Savings Bonds, Series I
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TreasuryDirect. Calculate the Value of Your Paper Savings Bonds
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eCFR. 31 CFR Part 359 Subpart C Book-Entry Series I Savings Bonds
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TreasuryDirect. How Do I…?
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TreasuryDirect. Cash EE or I Savings Bonds
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TreasuryDirect. FS Form 1522 – Special Form of Request for Payment of United States Savings and Retirement Securities
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TreasuryDirect. Get Help for Lost, Stolen, or Destroyed EE or I Savings Bonds
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eCFR. 31 CFR 315.70 General Rules Governing Entitlement
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TreasuryDirect. Disposition of Treasury Securities Belonging to a Decedent’s Estate Being Settled Without Administration FS Form 5336
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TreasuryDirect. Tax Information for EE and I Bonds
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Internal Revenue Service. Form 8815 – Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
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TreasuryDirect. Using Bonds for Higher Education
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Internal Revenue Service. Rev. Proc. 2025-32