Savings Bonds Tax Calculator: Interest, Deferral, and Exclusions

A savings bonds tax calculator answer comes in two steps: pull the accumulated interest figure from the free TreasuryDirect calculator, then multiply it by your federal marginal tax rate. That product is what you will owe the IRS. Savings bond interest is exempt from state and local income taxes, so nothing further is added at the state level.¹ Federal tax is due either when you cash the bond or when it reaches final maturity at 30 years, whichever comes first.

Getting Your Interest Figure From TreasuryDirect

The Treasury runs a free calculator at TreasuryDirect.gov. You enter three things: the series (EE or I), the denomination, and the issue date.² Paper bonds carry all three on the face of the certificate. Electronic bonds are already in your TreasuryDirect account.

The output field that matters for tax is Total Interest Earned. That is the cumulative interest since the issue date, and it is the number the IRS taxes. The calculator also shows the bond’s current value, year-to-date interest (useful if you report annually rather than at redemption), the next accrual date, and the final maturity date.² You can also enter a future “Value as of” date to project what the interest will be if you wait to cash it. Rate tables update every May and November.

Turning Interest Into a Tax Dollar Amount

Once you have the interest figure, multiply it by your marginal federal income tax rate. For 2026, single filer brackets run 10% (up to $12,400), 12% ($12,401–$50,400), 22% ($50,401–$105,700), 24% ($105,701–$201,775), 32% ($201,776–$256,225), 35% ($256,226–$640,600), and 37% above $640,600. A single filer in the 22% bracket cashing a bond with $2,000 of accumulated interest owes roughly $440 in federal tax on that interest.

Bond interest stacks on top of your other income for the year, so a large redemption can push part of the interest into the next bracket up. If that is a risk, you can split redemptions across two tax years or use the accrual method described below.

One place people miscalculate: the purchase price. Paper Series EE bonds, last sold in 2011, were bought at half their face value, so a $100 paper EE bond cost $50. Electronic EE bonds sold from May 2005 onward were bought at full face value.³ Series I bonds have always been sold at face value.⁴ The calculator handles this for you, but if you are doing back-of-envelope math from a bond’s face value, getting the purchase price wrong will double or halve your interest number.

Savings bond interest is exempt from state and local income taxes under federal law.¹ Your federal figure is the total tax figure.

If You Cash Within Five Years

EE and I bonds cannot be cashed at all during the first 12 months. Cashing between 12 months and five years costs you the last three months of interest as a penalty.⁵ Cash an I bond at 18 months and you get 15 months of interest.⁴ After five years, no penalty applies. The TreasuryDirect calculator applies the penalty automatically for bonds under five years old, so the Total Interest Earned figure already reflects the reduction. Use that reduced number for your tax math.

When the Tax Bill Actually Arrives

You have two options for reporting savings bond interest, and the choice controls the timing.

Deferring Until Redemption

This is what most bondholders do. You report nothing on your annual return and pay tax in the year you cash the bond or the year it hits final maturity at 30 years, whichever comes first.¹ Simple, but decades of interest arriving in one tax year can push you into a higher bracket.

Reporting Interest Each Year

You can instead report each year’s accrued interest on that year’s return, using the calculator’s year-to-date figure. This spreads the burden and often keeps you in a lower bracket. Two catches. First, in the year you switch to annual reporting, you must include all previously unreported interest on every savings bond you own.¹ Second, the method applies to all of your bonds, not just one. Switching back to deferral later requires filing IRS Form 3115.⁶

The Education Exclusion That Can Erase the Tax

Under Internal Revenue Code Section 135, some or all of your savings bond interest can be excluded from federal tax if the proceeds pay qualified higher education expenses.⁷ The rules are strict and missing any one disqualifies you.

You must have been at least 24 years old before the bond’s issue date. The bond must be a Series EE issued in 1990 or later, or any Series I bond. If the bond was for a child’s education, it must be registered in your name as the parent — bonds registered in the child’s name do not qualify. Married taxpayers filing separately cannot claim the exclusion.⁷

Qualified expenses are tuition and required fees at an eligible institution for you, your spouse, or your dependents. Room, board, books, and supplies do not count. Contributions to a 529 plan or Coverdell ESA do count, which means you can redeem the bond, roll the full proceeds into a 529 plan within 60 days, and exclude the interest.⁷

The exclusion phases out at higher incomes based on modified adjusted gross income. For 2025, the phase-out begins at $99,500 for single filers and $149,250 for joint filers, with the exclusion fully eliminated at $114,500 and $179,250 respectively. The 2026 thresholds will be slightly higher once the IRS publishes them. Inside the phase-out range, only a portion of the interest is excludable. Form 8815 walks through the calculation.⁸

Reporting the Interest on Your Return

When you cash a bond, you receive Form 1099-INT showing the total interest paid. Banks that process redemptions issue their own 1099. TreasuryDirect posts the 1099 in your account by January 31; Treasury Retail Securities Services mails one by the same date for paper bonds cashed by mail.⁹

Report the interest on Form 1040. If your total taxable interest from all sources exceeds $1,500 for the year, also file Schedule B listing each payer.¹⁰ Claiming the education exclusion means attaching Form 8815, which calculates the excludable amount as the ratio of qualified education expenses to total bond proceeds.⁸ The 1099-INT reports the full interest regardless of whether you qualify. If you file Form 8815 correctly, the IRS reconciles it. Skipping the form triggers a notice for underreported income.

Inherited Bonds

If you inherit bonds and the original owner had been deferring interest, you have two paths. You can include all interest earned through the date of death on the decedent’s final return. You then pay tax only on interest earned after that date when you eventually cash the bond. Or you can keep deferring and pay tax on the full accumulated interest when you redeem.¹

Reporting on the final return usually helps when the decedent’s income that year was low, because the interest lands in a lower bracket. If the estate paid federal estate tax, the beneficiary reporting the interest may claim a deduction for the portion of estate tax attributable to that interest.

Transfers Trigger Tax Immediately

Giving a bond to someone else and having Treasury reissue it in their name is a taxable event for you. You owe federal income tax on all interest the bond earned while you owned it, and Treasury issues a 1099-INT under your Social Security number.¹¹ The new owner is responsible only for interest after the reissue date.

If the transfer is a gift, federal gift tax rules apply separately. For 2026, you can give up to $19,000 per recipient without filing Form 709 or using any of your lifetime exemption.¹² A larger bond does not automatically create gift tax, but it does require the return. Income tax on accrued interest is a separate obligation from any gift tax.

Matured Bonds Sitting in a Drawer

EE and I bonds earn interest for 30 years and then stop. At final maturity, all accumulated interest becomes taxable that year whether you cash the bond or not. TreasuryDirect moves electronic bond proceeds into your account’s Certificate of Indebtedness automatically and issues a 1099. Paper bonds carry the same reporting obligation because the IRS treats the interest as constructively received.¹

If you have old paper bonds in a drawer, run them through the TreasuryDirect calculator to check the maturity date. If a bond has already passed final maturity, the interest should have been reported in the maturity year. Filing an amended return to catch this up is straightforward and better than leaving it.

1
TreasuryDirect. Tax Information for EE and I Bonds
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TreasuryDirect. Paper Savings Bond Calculator
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TreasuryDirect. EE Bonds
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TreasuryDirect. I Bonds
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eCFR. Maturities, Redemption Values, and Investment Yields of Series EE Savings Bonds
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Internal Revenue Service. About Form 3115, Application for Change in Accounting Method
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Office of the Law Revision Counsel. 26 USC 135 – Income From United States Savings Bonds Used to Pay Higher Education Tuition and Fees
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Internal Revenue Service. About Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
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TreasuryDirect. 1099 Tax Statements for Paper Savings Bonds and TreasuryDirect
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Internal Revenue Service. Instructions for Schedule B (Form 1040)
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TreasuryDirect. Changing Information About EE or I Savings Bonds (Reissuing)
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Internal Revenue Service. Gifts and Inheritances