How you sell Treasury bonds depends on which kind you own. Marketable securities — Treasury bonds, notes, and bills — are sold on the secondary market through a bank, broker, or dealer. Savings bonds (Series EE and I) aren’t traded; you redeem them for cash through TreasuryDirect or a financial institution. Each path has its own holding period, potential penalty, and tax bill.
Check the Holding Period First
You can’t sell or redeem a Treasury security the day after you buy it. The waiting rules differ by type.
Marketable securities bought through TreasuryDirect can’t be transferred or sold for 45 calendar days after the issue date, or for the full term of the security if that’s shorter.1eCFR. 31 CFR Part 363 Subpart F – Marketable Treasury Securities A 4-week bill bought through TreasuryDirect matures before the hold expires, so you cannot sell it early.2TreasuryDirect. Selling a Treasury Marketable Security Securities purchased through a brokerage account aren’t bound by that 45-day rule and can generally be sold at any time.
Series EE and I savings bonds must be held for at least 12 months from the issue date before you can cash them at all.3TreasuryDirect. I Bonds Redeem either type before five years and you forfeit the last three months of interest.4TreasuryDirect. EE Bonds A bond cashed after 18 months, for instance, pays only 15 months of interest. The redemption value will never drop below what you paid.5eCFR. 31 CFR 359.7 – If I Redeem a Series I Savings Bonds Before Five Years After the Issue Date, Is There an Interest Penalty After five years the penalty disappears.
Selling Marketable Treasury Securities
There is no “sell” button in TreasuryDirect. To sell a marketable Treasury before maturity, you have to work through a bank, broker, or dealer.2TreasuryDirect. Selling a Treasury Marketable Security
If the Bonds Are Already at a Broker
If you hold your Treasuries in a brokerage account, selling looks like any other bond trade. Contact your broker or place a sell order on the platform. The transaction happens on the secondary market, and your proceeds reflect the current market price rather than face value. Most firms handle it with no special paperwork beyond normal trade settlement.
If the Bonds Are in TreasuryDirect
Bonds bought directly from TreasuryDirect have to be moved out before they can be sold. You transfer the security to a broker or dealer’s account in the commercial book-entry system.6TreasuryDirect. How Do I – TreasuryDirect You’ll need a brokerage account already open to receive it. Once the 45-day hold has passed, initiate the transfer in TreasuryDirect; the security moves in $1,000 increments.1eCFR. 31 CFR Part 363 Subpart F – Marketable Treasury Securities After the broker receives it, they sell it for you on the secondary market. If you expect you might want to sell before maturity, buying through a brokerage in the first place skips this step.
What You’ll Actually Get
Sell before maturity and you receive the current market price, which may be above or below face value. Prices move inversely with interest rates: if rates have climbed since you bought, the bond trades at a discount; if rates have fallen, it trades at a premium.7TreasuryDirect. Understanding Pricing and Interest Rates Holding to maturity returns the full face value regardless of what happened in between. That price risk is what you take on when you sell early.
Redeeming Electronic Savings Bonds
For Series EE and I bonds held electronically in TreasuryDirect, redemption happens right in the portal. Log in, choose the bond, and pick a full or partial redemption.8TreasuryDirect. Redeem Savings Bonds – TreasuryDirect Partial redemptions are available only for electronic bonds. Proceeds land in your linked bank account.
The amount you receive is the current redemption value: accumulated interest plus principal, minus the three-month interest penalty if you’re inside the five-year window. No secondary market, no price fluctuation from rate moves. Savings bonds just grow at their stated rate.
Redeeming Paper Savings Bonds
Paper bonds take more effort. You can either cash them at a bank or mail them to Treasury.
At a Bank
If your bank is an authorized paying agent, walk in with the bonds and a government-issued photo ID and cash them there. Funds usually deposit straight into your account. Banks set their own limits on how much they’ll cash at once, and some won’t cash savings bonds at all.9TreasuryDirect. Cashing EE or I Savings Bonds Call first. And a paper bond has to be cashed for its full value; you can’t redeem only part of it.
By Mail
If the bank can’t handle it or you’d rather do it by mail, send the bonds and FS Form 1522 to Treasury Retail Securities Services.10TreasuryDirect. Special Form of Request for Payment of United States Savings and Retirement Securities The form asks for serial numbers, issue dates, your Social Security number, and direct deposit details. If the total redemption value is $1,000 or less, you sign and include a copy of a government ID. Above $1,000, your signature has to be witnessed by a notary or certifying officer. Mail-in processing runs several weeks.
Taxes on What You Sold or Redeemed
Treasury securities are exempt from state and local income tax, but federal tax still applies. How it works depends on which type you sold.
Savings Bond Interest
Interest on Series EE and I bonds is subject to federal income tax and exempt from state and local income taxes.11Office of the Law Revision Counsel. 31 USC 3124 – Exemption From Taxation Most people defer reporting the interest until the bond is cashed or matures. When that happens, you get a 1099-INT covering every dollar of interest the bond ever earned, and the full amount is reported as interest income for that tax year.12TreasuryDirect. Tax Information for EE and I Bonds The rate follows your ordinary income bracket.
One carve-out: if you use the proceeds for qualified higher education expenses, you may be able to exclude the interest from federal income tax by filing IRS Form 8815. 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. The bonds must have been issued after 1989, and you must have been at least 24 when you bought them.
Capital Gains on Marketable Bonds
Selling a Treasury bond or note on the secondary market before maturity produces a capital gain or loss. Sell above your adjusted basis and you have a gain; sell below and you have a loss.13Internal Revenue Service. Topic No. 409, Capital Gains and Losses The interest portion is still exempt from state and local tax, but the gain itself follows the standard capital gains rules.
Held longer than a year, gains qualify for long-term rates. For 2026:
- 0% on taxable income up to $49,450 (single), $98,900 (married filing jointly), or $66,200 (head of household)
- 15% up to $545,500 (single), $613,700 (married filing jointly), or $579,600 (head of household)
- 20% above those thresholds
Held one year or less, gains are short-term and taxed at your ordinary income rate. A net capital loss for the year can offset up to $3,000 of other income ($1,500 if married filing separately), with the rest carried forward.13Internal Revenue Service. Topic No. 409, Capital Gains and Losses Report bond sales on Form 8949 and Schedule D.