To report savings bond interest, put it on the interest line of Form 1040 in the year you cash the bond or the year it reaches final maturity, whichever comes first. If your total taxable interest from all sources tops $1,500, attach Schedule B and list the U.S. Treasury (or the bank that redeemed the bond) as the payer. The interest is federally taxable but exempt from state and local income tax.
When You Actually Owe the Tax
Series EE and Series I bonds earn interest for up to 30 years, and the default rule lets you defer reporting any of it until the bond is redeemed or hits final maturity. Whichever event comes first is your tax year.
The taxable amount is the difference between what you receive and what you paid. When you cash a bond through a bank, the bank issues Form 1099-INT for the full accumulated interest. When you cash through TreasuryDirect, the 1099-INT posts to your account by January 31 of the following year.1TreasuryDirect. 1099 Tax Statements for Paper Savings Bonds and TreasuryDirect
Here is the trap. If a bond reaches final maturity and you never cash it, the interest is taxable that year anyway. The IRS treats it as if you had redeemed it. Paper bonds sitting in a drawer past their 30-year mark are the single most common source of surprise tax bills, especially among people who inherited them.2Internal Revenue Service. Savings Bonds 1
Where It Goes on Form 1040 and Schedule B
Savings bond interest sits on the same line as your other interest income. If your total taxable interest for the year (bank accounts, CDs, bonds, everything combined) is $1,500 or less, enter it directly on the interest line of Form 1040 and you are done.2Internal Revenue Service. Savings Bonds 1
Above $1,500, you need Schedule B. In Part I, list each payer and each interest amount from your 1099-INTs. For a bond, the payer is “U.S. Treasury” or the name of the bank that cashed it. The total on Schedule B carries to Form 1040.3Internal Revenue Service. About Schedule B (Form 1040), Interest and Ordinary Dividends
You also need Schedule B regardless of the dollar amount if you are claiming the education exclusion or if you are backing out interest you already reported in a prior year.3Internal Revenue Service. About Schedule B (Form 1040), Interest and Ordinary Dividends
Backing Out Interest You Already Reported
The 1099-INT you get at redemption shows every dollar of interest the bond earned across its entire life. If any of that interest was already taxed in an earlier year, whether because you elected to report annually or because a previous owner paid tax on part of it, you would be taxed twice without an adjustment.
IRS Publication 550 spells out the fix on Schedule B. List the full 1099-INT amount on line 1 as usual. Above line 2, enter a subtotal of everything on line 1. On the next line write “U.S. Savings Bond Interest Previously Reported” and enter the amount already taxed in earlier years. Subtract that from the subtotal, and the result is what goes on line 2 and flows to Form 1040.4Internal Revenue Service. Publication 550 (2025), Investment Income and Expenses
Keep your own records of how much interest you (or a previous owner) reported and when. The IRS does not track this for you, and proving the subtraction later without documentation is difficult.
What to Do If You Never Got a 1099-INT
The tax is owed whether or not a 1099-INT shows up. If your bonds are in TreasuryDirect, pull the form from your account. For paper bonds that matured years ago without a form being issued, use the Treasury’s online Savings Bond Calculator. Enter the series, denomination, and issue date, and the calculator shows the redemption value and the accrued interest.5TreasuryDirect. Calculate the Value of Your Paper Savings Bond(s) Report that interest figure on your return.
You can also choose to report interest every year as it accrues rather than deferring. If you make that election, you must report all previously untaxed interest on every savings bond you own in the year you switch, and going back to deferral later requires following the IRS’s accounting-method-change procedures.6Internal Revenue Service. Topic No. 403, Interest Received
Excluding the Interest for Education
You can exclude some or all of the interest from your income if you use the redemption proceeds for qualified higher education expenses in the same tax year. Every one of these must be true:
- The bonds are Series EE or Series I, issued after 1989.
- The bond owner was at least 24 years old before the bond’s issue date. Bonds registered in a child’s name do not qualify.
- You are not filing married filing separately. There is no exception to this.7TreasuryDirect. Savings Bonds Using Bonds for Higher Education
- The proceeds pay qualified expenses for you, your spouse, or a dependent in the same year the bond is cashed.
- Your modified adjusted gross income falls below the phase-out ceiling.
For tax year 2026, the phase-out starts at $101,800 and ends at $116,800 for single, head of household, and qualifying surviving spouse filers. For joint filers, it starts at $152,650 and ends at $182,650.8Internal Revenue Service. Rev. Proc. 2025-32 These figures adjust for inflation each year; check the current Form 8815 instructions for other tax years.
Qualified expenses are tuition and fees required for enrollment at an eligible educational institution, which generally means any accredited college, university, or vocational school that participates in federal student aid. Contributions to a Coverdell Education Savings Account or a 529 plan also count. Room and board do not qualify, and neither do sports or hobby courses outside a degree program. You cannot use the same dollar of tuition for both this exclusion and an education credit on Form 8863 or the tax-free portion of a 529 or Coverdell distribution.9Internal Revenue Service. Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
To claim the exclusion, complete Form 8815 and attach it to your return. Report the full interest amount on Schedule B first, then let Form 8815 calculate the excludable portion based on your qualified expenses and modified AGI.9Internal Revenue Service. Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
Inherited or Reissued Bonds
When a bond changes owners, the interest earned up to the reissue date is taxable to the original owner. TreasuryDirect reports that interest on a 1099-INT under the original owner’s name and Social Security number. The new owner owes tax only on the interest earned after the reissue.10TreasuryDirect. Tax Information for EE and I Bonds
Inheritance works similarly but adds a choice. The personal representative preparing the decedent’s final return can elect to include all interest accrued up to the date of death on that final return. If they do, the beneficiary later owes tax only on post-death interest. If no election is made, the accrued interest becomes income in respect of a decedent, and the beneficiary owes tax on the full amount (pre-death plus post-death) when the bond is eventually cashed or matures. The beneficiary may be able to deduct any federal estate tax attributable to that interest.
For electronic bonds reissued through TreasuryDirect, the system splits the 1099-INTs automatically between the two owners. For paper bonds, the 1099-INT issued at redemption covers the bond’s entire lifetime of interest, so the new owner has to use the Schedule B subtraction method to report only the portion actually owed.10TreasuryDirect. Tax Information for EE and I Bonds