The basic steps to cash an I bond

To cash an I bond, you go to TreasuryDirect.gov, log into your account, and request a redemption. The money lands in your bank account within a few business days. That's the straightforward path for most people who own I bonds electronically.

If you own a paper I bond instead—one issued before 2012—the process is different. You'll mail the bond itself to a bank or the Federal Reserve, along with a form that proves who you are. Paper bonds take longer because they have to move through the mail and be processed by hand.

The timing matters. I bonds have a one-year holding period: you cannot cash one in during the first 12 months you own it, no matter what. After one year, you can cash it anytime. If you cash it before five years have passed, you lose the last three months of interest as a penalty.

Key Takeaways

  • Electronic I bonds are cashed through TreasuryDirect.gov by logging in and requesting a redemption, with the money reaching your bank account in a few business days.
  • Paper I bonds require you to mail the physical bond to a bank or Federal Reserve office along with proof of identity.
  • You cannot cash an I bond during its first 12 months; after that, you can redeem it anytime, but cashing before five years costs you three months of accrued interest.
  • The redemption value includes all interest earned up to the month you request the cash-out, not the exact day.

Cashing in an electronic I bond through TreasuryDirect

Log into your TreasuryDirect account at treasurydirect.gov using your username and password. From your account dashboard, find the bond you want to redeem and select the redemption option. TreasuryDirect will show you the current value—principal plus all interest earned—before you confirm.

Once you request the redemption, the system processes it and sends the money to the bank account you have on file with TreasuryDirect. This usually takes three to five business days. You'll receive an email confirmation with a transaction number.

If you've forgotten your TreasuryDirect password, you can reset it on the login page. If you've lost access to the email address tied to your account, you'll need to contact TreasuryDirect customer service by phone at 844-284-2676 to regain access.

Redeeming a paper I bond by mail

Paper I bonds are less common now, but if you own one, you'll need the physical bond itself. Write your signature on the back in the presence of a witness—usually a bank employee or notary—who will also sign and stamp it. This is called medallion signature may provide or sometimes just a bank signature.

Mail the signed bond, along with a completed Form PD 1239 (Request for Payment of Savings Bond), to the Federal Reserve Bank serving your region. You can find the correct address on the Treasury website under "Redeem a Paper Bond." Include a copy of your ID with the package. Send it certified mail so you have proof of delivery.

The Federal Reserve will verify the bond, calculate the redemption value, and mail you a check. This process typically takes four to six weeks from the day they receive your package. If the bond is lost or damaged, the process takes longer because you'll need to file a claim first.

What happens to your interest when you cash out early

I bonds earn interest every month, but that interest is only added to your bond's value on the first and fifteenth of each month. When you request a redemption, you receive all interest earned through the last interest-accrual date that has already passed. If you request redemption on the 20th of the month, you get interest through the 15th.

If you cash the bond before it has been held for five years, the Treasury withholds the last three months of interest as a penalty. For example, if you've owned the bond for two years and it has earned $100 in total interest, you'll receive $91 (the $100 minus three months' worth). This penalty exists whether you cash it at one year or at four years and eleven months.

After five years, there is no penalty. You receive the full redemption value with all interest intact, no matter when you cash it after that point.

Tax reporting when you redeem an I bond

The interest you earn on an I bond is subject to federal income tax. When you cash the bond, the Treasury does not automatically withhold taxes—you owe them when you file your tax return. Keep the redemption confirmation from TreasuryDirect or the check stub from a paper bond redemption, because you'll need it to report the interest on your return.

The amount of interest is the difference between what you paid for the bond and what you received when you cashed it. If you bought a $100 I bond and cashed it for $127, the $27 is taxable interest. You report this on your federal tax return in the year you cash the bond.

I bonds are exempt from state and local income tax, so you only owe federal tax on the interest. If you're unsure how to report the interest, a tax professional or the IRS website can walk you through the process.

What to do if you cannot access your TreasuryDirect account

If you've forgotten your username or password, use the "Forgot Username" or "Forgot Password" links on the TreasuryDirect login page. You'll be asked to verify your identity using information from your account setup, and a reset link will be sent to your email.

If you no longer have access to the email address you used to create your account, or if you suspect someone else has accessed it, call TreasuryDirect customer service at 844-284-2676. They can verify your identity using your Social Security number and other personal information, then help you regain access or update your email address.

For paper bonds, if you've lost the physical bond, contact the Treasury at 844-284-2676 as well. They can file a claim on your behalf, but the process takes longer and requires documentation of the loss.

Cashing I bonds owned by a minor or in a trust

If an I bond is registered in a minor's name, a parent or legal guardian can redeem it through TreasuryDirect using the minor's Social Security number. The parent logs in with their own credentials but accesses the minor's account. The redemption value is paid to the account linked to the minor's TreasuryDirect profile.

If an I bond is held in a trust, the trustee can redeem it through TreasuryDirect or by mail, depending on whether it's electronic or paper. The trustee will need to provide documentation of their authority to act on behalf of the trust when redeeming a paper bond.

For either situation, if you're unsure about the process, TreasuryDirect customer service can confirm what documents or steps are needed based on how the bond is registered.

Frequently Asked Questions

Can I cash in only part of an I bond?

No. I bonds are redeemed in full. You cannot cash in a portion of a single bond and keep the rest earning interest. If you own multiple bonds, you can choose which ones to redeem and leave others untouched.

What if I cash my I bond and then change my mind?

Once the redemption is processed and the money is in your bank account, it cannot be reversed. The bond is gone. You would have to purchase a new I bond if you wanted to own one again, but you cannot undo the redemption of the original bond.

Do I have to report the interest on my taxes in the year I cash the bond?

Yes. Federal income tax is owed on the interest in the year you redeem the bond. You report it on your tax return for that year, even if you don't receive a 1099 form from the Treasury. Keep your redemption confirmation as proof of the transaction.

What if my TreasuryDirect account shows a bond but I don't remember buying it?

Contact TreasuryDirect customer service at 844-284-2676 to verify the bond's ownership and history. It's possible someone else set up the account, or the bond was transferred to you. They can help you understand how the bond came to be in your account.

How long does it take to get my money after I request a redemption?

For electronic bonds through TreasuryDirect, the money usually arrives in your linked bank account within three to five business days. For paper bonds sent by mail, expect four to six weeks from the day the Federal Reserve receives your package.