What Happens When I Bonds Reach Maturity? Taxes, Redemption, and Heirs

When a Series I savings bond reaches maturity, it stops earning interest and the full accumulated interest becomes taxable on your federal return for that year, whether or not you cash the bond. That is what happens when I bonds reach maturity: growth ends at exactly 30 years from the issue date, and the IRS treats the maturity year as the year the deferred interest comes due. Redeeming the bond is a separate step, and if you skip it, the money just sits there earning nothing while the tax bill still arrives.¹²

When Your Bond Actually Matures

Every I bond has a 30-year life, structured as a 20-year initial maturity period followed by a 10-year extension. Interest accrues the whole time, then stops cold at the 30-year mark.³

For an electronic bond held in TreasuryDirect, the maturity date is tracked for you, and the account handles the transition automatically when the day arrives.² For a paper bond, you have to look at the issue date printed on the certificate and count forward 30 years. Treasury stopped selling paper I bonds on January 1, 2025, but millions of paper certificates are still out there, and many of the oldest are now approaching their end.¹

The Tax Bill Comes Due at Maturity

Most I bond owners defer federal income tax on interest until they cash the bond. The thing people miss is that the deferral also ends automatically at the 30-year mark. If your bond matures and you don’t redeem it, the IRS still treats the full lifetime of accumulated interest as reportable income in that maturity year.²

That interest is subject to federal income tax but exempt from state and local tax.⁴ After 30 years of semiannual compounding, the taxable amount can be large enough to push you into a higher bracket for the year, which is why people who have been deferring often plan their redemption around the calendar rather than letting the maturity date catch them off guard.

For an electronic bond, Treasury moves the matured proceeds into a Certificate of Indebtedness inside your TreasuryDirect account and issues a 1099-INT reflecting all the interest the bond earned. You owe the tax whether the money is still sitting in the Certificate of Indebtedness or has been transferred to your bank.²

If you had been reporting interest annually instead of deferring, maturity is less dramatic: you have already paid tax on the accrued interest year by year, so only the final stub of interest remains to be reported.²

How to Redeem a Matured I Bond

Treasury does not charge a fee to cash an I bond. The process depends on whether you hold the bond electronically or on paper.

Electronic Bonds

Log into TreasuryDirect, go to ManageDirect, and select Redeem securities. Pick the bond, and the proceeds move to your linked bank account.⁵ Electronic bonds allow partial redemption so long as at least $25 stays in the bond if you don’t cash the whole thing, though at maturity there’s no reason to leave any balance behind.⁶

Paper Bonds

You can cash paper I bonds at a bank or credit union where you have an established relationship, or by mailing them to Treasury. Many banks will only cash bonds for existing customers, and Federal Reserve guidance recommends a 12-month banking relationship. Each institution sets its own policy, so call ahead.⁷

For mail-in redemption, complete FS Form 1522 and send it with the physical bonds to the address on the form.⁸ If the total value exceeds $1,000, your signature has to be certified. Authorized certifiers include notaries, bank officers, commissioned military officers, and judges or clerks of a U.S. court.⁹ Notary fees typically run between $2 and $25. A paper bond must be redeemed for its full face value; partial redemption is not available.

Lost or Destroyed Paper Bonds

A missing paper bond isn’t lost money. File FS Form 1048 with Treasury to claim the value. If you don’t know the serial numbers, Treasury Hunt can search for bonds tied to your Social Security number and produce a special version of FS Form 1048 for bonds issued in 1974 or later. The special form has to be signed in front of a notary or other certifying official before you mail it.¹⁰

If the Original Owner Has Died

When the bondholder has passed away, who can redeem a matured bond depends on how it was registered.

A bond registered with a payable-on-death beneficiary becomes the sole property of that beneficiary once they provide proof of death. They can cash it or have it reissued in their own name.¹¹

With no named beneficiary, a legal representative of the estate can request payment or distribute the bonds. Letters of appointment must be dated within one year of submission. If the estate has already closed, a certified copy of the final accounting or decree of distribution works as documentation.¹¹

For small estates with no formal administration planned and total Treasury securities of $100,000 or less, an eligible family member can act as a voluntary representative to redeem or distribute the bonds without probate.¹¹

Inheriting a bond does not erase the deferred interest. For reissued electronic bonds, Treasury reports interest earned up to the reissuance date on a 1099-INT in the deceased owner’s name or their estate, and interest after reissuance is reported under the new owner’s Social Security number.² For an inherited paper bond that is eventually cashed, the 1099-INT shows the entire lifetime of interest in the new owner’s name, and the new owner has to show the IRS which portion belonged to the previous owner. IRS Publication 550 covers how to split it.

If You Let a Matured Bond Sit

A matured bond that never gets cashed is not forfeited, but it isn’t working either. Interest stopped at maturity, and if you had been deferring tax, the full accumulated interest is reportable that year whether the bond sits on your shelf or in your drawer.

Treasury has shifted inquiries about unredeemed matured bonds to state unclaimed property programs. Each state can search Treasury’s database of matured, unredeemed securities, and some old bonds may have already been transferred to the state as unclaimed property.¹² If you think you have old bonds you’ve lost track of, start with your state’s unclaimed property office. For electronic bonds, nothing is lost: matured proceeds move automatically into a Certificate of Indebtedness in your TreasuryDirect account, and the money stays there until you transfer it out.²

1
TreasuryDirect. I Bonds
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TreasuryDirect. Tax Information for EE and I Bonds
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U.S. Treasury Fiscal Data. Treasury Savings Bonds Explained
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Internal Revenue Service. Tax Topic 403 – Interest Received
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TreasuryDirect. Cashing EE or I Savings Bonds
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TreasuryDirect. Converting EE or I Paper Bonds to Electronic Bonds
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Federal Reserve Financial Services. Savings Bond Redemptions Frequently Asked Questions
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Department of the Treasury | Bureau of the Fiscal Service. FS Form 1522 – Special Form of Request for Payment of United States Savings and Retirement Securities
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TreasuryDirect. Signature Certification
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TreasuryDirect. Get Help for Lost, Stolen, or Destroyed EE or I Savings Bond
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eCFR. Title 31 Part 315 Subpart L – Deceased Owner, Coowner or Beneficiary
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TreasuryDirect. Treasury Hunt