Cash it in at your bank or the Treasury

When you want to use a savings bond, you have two main routes: your bank or the U.S. Department of the Treasury. Most people cash bonds at their bank because it takes one visit and a few minutes. Bring the bond itself, your ID, and a signature. The bank verifies the bond is real, checks that you are the owner or an authorized person, and gives you the cash or deposits it to your account.

If your bank will not cash it — some smaller banks decline — you can mail the bond directly to the Treasury. Send it to the Bureau of the Fiscal Service, Parkersburg, West Virginia 26106-1328, along with a form FS 1522 (Request to Surrender Savings Bonds). The Treasury will send you a check in the mail, which usually takes two to four weeks. You can download form FS 1522 from treasurydirect.gov.

Either way, you get the full current value of the bond — the original purchase price plus all the interest it has earned. There is no penalty for cashing a bond after it has stopped earning interest, though you will owe federal income tax on the interest in the year you cash it.

Key Takeaways

  • Your bank will cash a savings bond in one visit if you bring the bond, your ID, and a signature.
  • If your bank declines, mail the bond and form FS 1522 to the Treasury's Parkersburg office and expect a check in two to four weeks.
  • You owe federal income tax on the interest your bond earned, but you can choose to report it all in the year you cash it or spread it across the years you held it.
  • Series EE and I bonds have a one-year holding requirement and a penalty if you cash them within five years, so check your bond's issue date before cashing early.
  • If a bond owner has died, the person named as beneficiary or the estate representative can cash it with a death certificate and proof of authority.

Understand the penalty for cashing early

Series EE bonds and Series I bonds (the most common types sold today) have a built-in cost if you cash them before five years have passed. The penalty is the last three months of interest. So if you bought a bond in January 2023 and cash it in January 2024, you lose the interest from October, November, and December 2023. You still get the original purchase price and nine months of interest, but not the full year.

Series EE and I bonds also require you to hold them for at least one year before you can cash them at all. If you try to cash a bond you bought less than a year ago, the bank or Treasury will refuse.

Older bonds — Series A through D, and some Series H and HH bonds — may have different rules depending on when they were issued. If you own an older bond, check the issue date and series letter on the front. The Treasury's savings bond calculator at treasurydirect.gov will tell you the exact value and any penalties.

Report the interest on your taxes the right way

When you cash a bond, the interest you earned is taxable income to the federal government. You do not receive a 1099 form from the Treasury — you are responsible for reporting it yourself on your tax return.

You have two choices about when to report the interest. The first is to report all of it in the year you cash the bond. This is simpler and is what most people do. If you cashed a bond in 2024 and it earned $500 in interest over ten years, you report the full $500 on your 2024 tax return.

The second choice is to report the interest year by year as the bond earned it, even though you did not cash it until later. This requires you to file Form 8818 (Optional Reporting of Interest from U.S. Savings Bonds) in the first year you choose this method. It is more work and only makes sense if you are in a much lower tax bracket now than you were when you held the bond. Most people skip this option.

State and local income taxes do not apply to savings bond interest, so you do not report it on your state return.

Use the education exception to avoid federal tax

If you cash a Series EE or Series I bond in the same year you pay for may have access to education expenses — tuition and fees at a college, university, or vocational school — you may not owe federal tax on the interest. This is called the education savings bond exclusion.

The exclusion has strict limits. The bond owner must be at least 24 years old when the bond was issued. The bond must have been issued after 1989. The education expenses must be paid in the same calendar year you cash the bond, and they must be for the bond owner, the owner's spouse, or the owner's dependent child or grandchild. The expenses must be for tuition and fees only — room, board, books, and supplies do not count, though some vocational programs include them.

You also have to meet an income limit. In 2024, the exclusion begins to phase out if your modified adjusted gross income is above $91,750 (single) or $145,600 (married filing jointly). These limits change each year. If you think you may have access to, file Form 8815 (Exclusion of Interest from U.S. Savings Bonds Issued to Individuals Who Are 24 Years of Age or Older) with your tax return.

What to do if the bond owner has died

If you are named as a beneficiary on a savings bond, you can cash it by bringing the bond, your ID, and a certified copy of the owner's death certificate to your bank. The bank will verify your identity and process the cash-in. You will owe federal income tax on the interest in the year you cash it.

If there is no named beneficiary, the bond becomes part of the owner's estate. The person handling the estate — called the executor or personal representative — can cash the bond by providing the death certificate and a copy of the court document that gives them authority (usually the will or a probate order). This process is slower because the court document takes time to obtain.

If you are unsure whether you are named as a beneficiary, contact the bank where the bond is held or call the Treasury's customer service line at 844-284-2676.

Decide whether to reinvest the money

Once you have the cash from your bond, you have choices about what to do with it. If you cashed the bond because you needed the money for an expense, the decision is made. But if you cashed it because the bond stopped earning interest or you wanted to move the money elsewhere, you should think about where it goes next.

A high-yield savings account is a common choice if you want safety and a better interest rate than a regular savings account. Rates vary by bank and change frequently, but they are usually between 4% and 5% per year. The money stays liquid — you can withdraw it whenever you need it — and it is insured by the FDIC up to $250,000.

A certificate of deposit (CD) locks your money away for a set time — three months, six months, one year, or longer — but pays a higher rate than a savings account. If you withdraw early, you lose some interest. A CD makes sense if you know you will not need the money for a specific period.

If you want to buy more savings bonds, you can do that through treasurydirect.gov. Series I bonds are popular right now because they adjust their rate every six months based on inflation, though the rate has been falling as inflation has cooled.

Keep records of what you cashed and when

Save the receipt from your bank or the Treasury's check stub showing the bond's series, denomination, issue date, and the amount you received. You will need this if the IRS ever asks about the interest you reported, and it helps you track your savings over time.

If you cashed bonds over many years, a simple spreadsheet with the issue date, amount, interest earned, and year cashed will make tax time easier. You can also use the Treasury's savings bond calculator to look up any bond you own or owned — it keeps a record of bonds issued through treasurydirect.gov, though not paper bonds purchased before the system existed.

Frequently Asked Questions

Can I cash a savings bond before it matures?

Yes, but Series EE and I bonds have a one-year holding requirement and a penalty if you cash them before five years. The penalty is the last three months of interest. Older bond series have different rules depending on their issue date. Check treasurydirect.gov or ask your bank about your specific bond.

Do I have to pay state income tax on savings bond interest?

No. Savings bond interest is exempt from state and local income tax. You only owe federal income tax on the interest, which you report on your federal return in the year you cash the bond.

What if I lost the physical bond?

If you bought the bond through treasurydirect.gov, it exists only as a digital record and you cannot lose it. If you own a paper bond, contact the Treasury at 844-284-2676 with the bond's series, denomination, and issue date. They can issue a replacement, though the process takes several weeks.

Can I transfer a savings bond to someone else without cashing it?

No. Savings bonds are not transferable. You can name a beneficiary who can cash it after you die, but you cannot give a living bond to another person. If you want to give money to someone, you have to cash the bond first and then give them the cash.

What happens if I cash a bond and do not report the interest on my taxes?

The interest is still taxable income whether you report it or not. If the IRS finds out you did not report it, you will owe the tax plus penalties and interest on the unpaid amount. It is simpler and safer to report it in the year you cash the bond.