Top 5 Savings Bond Tax Questions

Answers to the most common asked U.S. Savings Bond tax questions, whether selling or holding.


The difference between the purchase price and the redemption (cash-in) value of an U.S. Savings Bond is considered report-able interest income. Often, paper bond owners are surprised that their bonds are worth much more than the face value (amount printed on the bond) when the bond reaches its final maturity (and stops earning interest).

1. What Taxes Will I Owe When Cashing In Savings Bonds?

  • Savings bonds are exempt from state and local income taxes.
  • They are subject to any federal, estate, excise and gift taxes, including state estate and/or inheritance taxes.

2. When Must I Report Taxes On Savings Bonds?

You can defer reporting the interest income (earnings) on a savings bond until it reaches final maturity, which is normally 30 years from the issue date, OR when you redeem it – whichever occurs first!

If you give up ownership of a savings bond and it is reissued to someone else, you will need to report the interest earnings up to date you owned the bond.


3. What Tax Forms Will I Receive After Cashing In Savings Bonds?

The redeeming institution, such as a bank, will issue a paper 1099-INT either on the spot, or mail it to you in the first few months following the year the PAPER bond was redeemed.  This interest income information will also be supplied to the Internal Revenue Service.

To obtain savings bond cash in values and the total interest earned amounts, use a complimentary savings bond calculator.

  • For electronic Savings Bonds, individuals must print out their own 1099-INT from their Treasury Direct Account.
  • Paper 1099-INT statements will NOT be mailed for paper bonds that were converted to electronic bonds (or newly purchased e-bonds).

4. How Should Interest Income From Savings Bonds Be Reported On My Tax Return?

  • Savings bonds do NOT have a special tax rate.
  • Interest earned from savings bonds should be reported on the same line with other interest income on a Federal Income Tax Return.
  • If reporting the interest earnings on bonds that another person owns, such as your child, report that interest on the other person’s Federal Income Tax Return along with other interest income they are reporting.

Depending upon all the other factors concerning your tax return, you may, or may not, owe any income taxes at all!


5. How Can I Avoid Having To Report A Large Amount Of Interest Income In Any Given Year?

  • You can elect to report ALL of the interest earned to date on your Federal Income Tax Return before you redeem the bond(s).
  • Once this election is chosen, you must report the annual interest earned amounts for all your bonds, (including any new bond purchases) each year thereafter, on your tax returns. 
  • Keep good records as proof of all of the annual interest reporting.
  • When redeeming bonds, you will receive a 1099-INT for ALL of the interest earned – regardless of what was previously reported (the government doesn’t keep track of annual interest reporting).
  • Advise any co-owners, beneficiaries, heirs and financial or tax planners of the annual interest reporting, to avoid a double taxation issue.

About is an online financial bond management company providing essential U.S. Savings Bond information since 1992. For over 26 years, bond experts have created various consumer programs, tools and services not offered elsewhere, including an online complimentary savings bond calculator, providing cash in values with important financial information presented on a personalized, color-coded Savings Bond Inventory Report. Unique savings bond management services include signature monthly summary emailed Savings Bond Statements, which help bond owners maximize their investment, avoid losing money and paying unnecessary taxes.

Last Updated: April 12, 2019

About the author

Jackie Brahney is the Marketing and Editorial Director and most notably, an U.S. Savings Bond Expert for Since 1991, she has done extensive research on savings bonds and state of the art savings bond valuation systems, and heads the company's public relations and marketing initiatives.


    1. Hi Donna –

      The best way to determine the value of your Savings Bonds is to use a free online calculator like the one we have available at Savings Bond Calculator. It might also be wise to check out our Savings Bonds Management services as we help you make the best decision possible through the use of our Monthly Emailed Statements and Color-Coded Bond Inventory Report that shows you what bonds you should be holding onto and what you can cash/redeem to maximize your investment! Feel free to reach out if you have any questions, we’re happy to help.

      Thanks – Steve

    1. Hi Peter, the persons entitled to the deceased persons EE Bonds (assuming they are paper) can go to a Federal Reserve bank (that handles savings bonds, call ahead) with a death certificate and redeem them at the bank. The Fed does not automatically redeem savings bonds. Bring proper documentation to the bank. If there is a beneficiary listed on the bonds, that person is entitled to the bonds. Best, Jackie Brahney

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