A partial redemption of electronic savings bonds lets you cash a specific dollar amount from a Series EE or Series I bond held in TreasuryDirect while the rest of the bond keeps earning interest. You can withdraw as little as $25, as long as at least $25 in redemption value stays behind, and the bond must be more than 12 months past its issue date. If it’s less than five years old, you’ll forfeit the last three months of interest on the amount you cash.
The Two $25 Thresholds
Every partial redemption has to clear two floors. The amount you cash must be at least $25, and the bond has to retain a redemption value of at least $25 after the transaction. Above the $25 minimum, you can redeem in one-cent increments, so an amount like $25.01 or $347.63 works. Each redemption carries out both principal and a proportionate share of accrued interest.1eCFR. 31 CFR 363.57 – What Are the Rules for Redeeming Savings Bonds in My Account
If your requested amount would drop the remaining balance below $25, TreasuryDirect blocks the transaction rather than forcing a full redemption. You’d need to lower the amount or redeem the bond in full as a separate step.2eCFR. 31 CFR 363.54 – What Is the Minimum Amount of a Book-Entry Savings Bond
There’s no daily or monthly cap. If you own several bonds and want to cash portions of each in one sitting, you can, as long as each individual transaction clears both $25 thresholds.3TreasuryDirect. TreasuryDirect FAQ
The 12-Month Lockout and the Three-Month Interest Penalty
No part of a savings bond can be redeemed within the first 12 months after its issue date. This applies to both Series EE and Series I bonds, and there are no exceptions. That first year is fully locked.
Between month 13 and the five-year mark, you can redeem freely, but Treasury shortens the earning period on the cashed amount by three months. A bond redeemed at nine months of interest, for example, pays as though it had earned only six. The three-month forfeit applies to Series I bonds4eCFR. 31 CFR Part 359 – Offering of United States Savings Bonds, Series I – Section 359.7 and to Series EE bonds issued since May 1997.5eCFR. 31 CFR 351.31 – What Is the Interest Penalty for Series EE Bonds
After five full years, the penalty disappears. If you own bonds of different ages and have a choice, cashing from one past the five-year mark preserves all of its earned interest.
How Interest Splits Between the Cash and the Remainder
Treasury allocates accrued interest proportionally. Cash half the bond’s value and roughly half the accrued interest goes out with the payment; the other half stays with the bond. The portion left behind keeps earning at the same rate as before, so a partial redemption doesn’t reduce future yield on what remains.1eCFR. 31 CFR 363.57 – What Are the Rules for Redeeming Savings Bonds in My Account
Federal Tax on the Interest You Cash
Savings bond interest is subject to federal income tax, but most owners defer, reporting nothing until they cash the bond or it reaches final maturity at 30 years. Under deferral, a partial redemption is a taxable event only on the interest portion of the amount you cashed. The remaining balance keeps deferring.6TreasuryDirect. Tax Information for EE and I Bonds
TreasuryDirect issues a 1099-INT for any year in which a redemption generates interest. It’s available inside your account by January 31 of the following year, and the system emails you when it’s ready.7TreasuryDirect. 1099 Tax Statements for Paper Savings Bonds and TreasuryDirect
Interest is exempt from state and local income tax, so only the federal bill matters when you calculate net proceeds.6TreasuryDirect. Tax Information for EE and I Bonds
Using the Redemption for Qualified Education Expenses
If you spend the proceeds on qualified higher education expenses in the same year you redeem, you can exclude the interest from federal tax. The exclusion covers Series EE and Series I bonds, but the bond owner had to be at least 24 years old before the issue date. Bonds a parent bought in a child’s name when the child was under 24 don’t qualify.8Internal Revenue Service. Form 8815 – Exclusion of Interest From Series EE and I US Savings Bonds Issued After 1989
Qualified expenses are tuition and required fees at an eligible institution, plus contributions to a Coverdell ESA or a 529 plan. Room and board are out. So are courses in sports, games, or hobbies unless they’re part of a degree program. Expenses already covered by other tax-free education benefits, used for an education credit, or applied to a tax-free 529 or Coverdell distribution can’t be used again here.8Internal Revenue Service. Form 8815 – Exclusion of Interest From Series EE and I US Savings Bonds Issued After 1989
Income limits phase out the exclusion. For 2026, phase-out begins at $101,800 of modified adjusted gross income for single filers and $152,650 for joint filers. Married filing separately can’t take the exclusion at any income. You claim it on IRS Form 8815 with your return for the year of redemption.
Who Can Cash the Bond
An electronic bond lives in the primary owner’s TreasuryDirect account. If the bond is registered with a secondary owner (co-owner), that person can redeem it only if the primary owner has granted “View and Transact” rights. Without that grant, only the primary owner can act on the bond.9TreasuryDirect. Savings Bonds Glossary
If the bond names a beneficiary and the owner dies, the beneficiary becomes the sole and absolute owner once proof of death is provided, with full rights to redeem in whole or in part.10eCFR. 31 CFR Part 315 Subpart L – Deceased Owner, Coowner or Beneficiary
Submitting the Redemption in TreasuryDirect
Log in, open ManageDirect, and click “Redeem securities” under Manage My Securities. Pick the Series EE or Series I bond, choose the partial redemption option, and enter the dollar amount.11TreasuryDirect. Cashing EE or I Savings Bonds
Check your linked bank account before you start. An outdated or closed account will cause the transfer to fail. You can review and update it in your account settings.
The confirmation screen breaks out principal, interest, and any early-redemption penalty. Review the figures, submit, and save the confirmation. Your account balance updates immediately, and the funds land in your linked bank account, typically within a few business days.12TreasuryDirect. Redeem Savings Bonds