You redeem I bonds through TreasuryDirect, the U.S. Department of the Treasury's online platform where you hold them

I bonds are held only in electronic form in a TreasuryDirect account — there are no paper certificates to cash in at a bank. To redeem them, you log into your TreasuryDirect account, select the bonds you want to cash, and request the redemption. The Treasury transfers the money to your linked bank account within one to three business days. You cannot redeem I bonds at a bank, credit union, or brokerage, and you cannot sell them to another person.

The process itself takes minutes, but I bonds have rules about when you can redeem them without penalty. If you redeem an I bond before it has been held for five years, you lose the last three months of interest. After five years, you can redeem with no penalty. There is no upper age limit — you can hold an I bond for 30 years and redeem it whenever you choose.

Key Takeaways

  • I bonds are redeemed only through TreasuryDirect by logging into your account and selecting the bonds to cash.
  • Redeeming before five years costs you the last three months of interest; after five years there is no penalty.
  • The Treasury deposits the redemption amount to your linked bank account within one to three business days.
  • You must have a TreasuryDirect account and a valid Social Security number or Individual Taxpayer Identification Number to hold and redeem I bonds.
  • I bonds redeemed are reported to the IRS on Form 1099-INT; you owe federal income tax on the interest earned, though not state or local tax.

Setting up your TreasuryDirect account before you can redeem

If you already own I bonds in TreasuryDirect, you have an account and can skip this step. If you are redeeming bonds purchased for you by someone else, or if you inherited bonds, you may need to set up a separate account or transfer them into your own account — the process depends on who originally purchased them and whether they were registered in your name.

To create a TreasuryDirect account, go to treasurydirect.gov, click "Open an Account," and provide your name, Social Security number or ITIN, date of birth, email address, and a password. You will need to verify your identity by answering security questions based on your credit history. The account opens immediately. You then link a bank account (checking or savings) where the Treasury will deposit redemption proceeds. This bank account must be in your name.

Logging in and selecting the bonds to redeem

Once you are in your TreasuryDirect account, click "ManageDirect" on the left menu. You will see a list of all securities you hold, organized by type. I bonds appear under "Savings Bonds." Each bond shows the series (I), the issue date, the face value (what you paid for it), the current value, and the next interest accrual date.

Click on the I bond you want to redeem. The screen will show you the penalty, if any. If the bond is less than five years old, the screen will display a message stating that you will forfeit the last three months of interest. Read this carefully — once you confirm the redemption, you cannot undo it. If you want to proceed, click "Redeem" and confirm your choice.

Understanding the five-year holding period and the three-month interest penalty

I bonds earn interest monthly, but that interest is paid in three-month blocks. If you redeem before five years have passed, you lose the interest from the most recent three-month block. For example, if you bought an I bond on March 15, 2021, and redeem it on March 10, 2024 (just under three years), you lose the interest that would have been paid on March 15, 2024. You receive all interest earned up to December 15, 2023.

After five years, there is no penalty. If you redeem that same bond on March 15, 2026 (exactly five years), you receive all interest earned through the most recent accrual date with no forfeiture. Many people hold I bonds to the five-year mark specifically to avoid this penalty, then redeem whenever they need the money.

What happens after you request the redemption

Once you confirm the redemption in TreasuryDirect, the transaction is submitted. The Treasury processes redemptions on business days only. If you submit on a Friday after 8 p.m. Eastern time, or over a weekend, the transaction will not process until Monday. The money typically reaches your linked bank account within one to three business days after processing.

You will receive a confirmation email from TreasuryDirect showing the redemption amount, the date it was processed, and the date it should arrive in your bank account. Check your bank account to confirm the deposit. If the money does not arrive within three business days, contact TreasuryDirect customer service at 844-284-2676.

Tax reporting and what you owe on the interest

When you redeem an I bond, you owe federal income tax on all the interest you earned, whether you earned it over one year or thirty years. The Treasury reports the total interest on Form 1099-INT, which is sent to you and the IRS in January of the year after you redeem. You report this interest on your federal tax return for that year.

You do not owe state or local income tax on I bond interest — this is a federal benefit. If you bought the I bond with money from a tax-advantaged education savings plan (a 529 plan), the interest may be tax-free under certain conditions, but that depends on how the 529 plan was structured and how you use the money. Consult a tax professional if you are redeeming I bonds purchased through a 529 plan.

Redeeming I bonds held in a minor's name or inherited I bonds

If an I bond is registered in a minor's name, the parent or guardian who owns the TreasuryDirect account can redeem it through their own account. The minor does not need their own account. The interest is reported on the minor's Social Security number, and the parent or guardian reports it on the minor's tax return (or the minor's own return if they file one).

If you inherited an I bond, you cannot redeem it in the original owner's TreasuryDirect account. You must open your own account and request that the Treasury transfer the bond into your name. This process is called "reissuing" the bond. Contact TreasuryDirect to request a reissue form, complete it, and submit it with a copy of the death certificate. Once the bond is in your account, you can redeem it following the standard steps. The reissue process can take several weeks.

Frequently Asked Questions

Can I redeem only part of an I bond?

No. I bonds are redeemed in full. You cannot cash in half of a bond and keep the other half. If you own multiple I bonds, you can choose which ones to redeem and leave others untouched, but each individual bond must be redeemed entirely.

What if I forget my TreasuryDirect password?

Click "Forgot Password" on the TreasuryDirect login page. You will be asked to verify your identity by answering security questions. If you cannot answer them, call TreasuryDirect at 844-284-2676 and speak with a representative who can verify you and reset your password.

Can I redeem an I bond if I lost access to the email address I used to open my account?

Yes, but you will need to contact TreasuryDirect by phone at 844-284-2676. A representative can update your email address and help you regain access to your account. Bring a government-issued ID to verify your identity.

Does redeeming an I bond affect my credit score?

No. Redeeming an I bond is a transaction between you and the Treasury. It does not appear on your credit report and has no effect on your credit score.

What if the redemption amount seems wrong?

Check the issue date and current value shown in TreasuryDirect before you redeem. The redemption amount should match the current value displayed. If it does not, or if you notice a discrepancy after the money arrives in your bank account, contact TreasuryDirect immediately at 844-284-2676 with your bond details and the confirmation email.