Cash them in at a bank or through the Treasury

You can redeem a savings bond at most banks and credit unions, or directly through the U.S. Department of the Treasury. At a bank, bring the bond itself, your ID, and a signature may provide (the bank can tell you if you need one — usually required for bonds worth more than $5,000 or if the bond is registered to someone who has died). The bank will verify the bond's value, deduct any applicable taxes, and deposit the money into your account.

If you prefer to avoid a bank visit, you can redeem Series EE and Series I bonds online through TreasuryDirect.gov. You will need to set up or log into your TreasuryDirect account, enter the bond information, and request the redemption. The money typically arrives in your linked bank account within a few business days. Series HH bonds (older bonds issued before 2004) cannot be redeemed online and must go through a bank or the Treasury's mail-in process.

Key Takeaways

  • You can cash in a savings bond at any bank, credit union, or through TreasuryDirect.gov without penalty once it reaches final maturity or after you have held it for one year.
  • Federal income tax is owed on the interest your bond earned, but you can choose to report it all at once when you redeem or spread it across the years you held the bond.
  • Series I bonds have a penalty if redeemed before five years of ownership, but Series EE bonds have no early-redemption penalty after one year.
  • Reinvesting the proceeds into a new bond, a high-yield savings account, or a CD depends on current interest rates and how long you can lock the money away.

Understand the tax consequences before you redeem

When you redeem a savings bond, you owe federal income tax on all the interest it earned. The amount of interest is the difference between what you paid for the bond and what you receive when you cash it in. You do not owe state or local income tax on savings bond interest — that is a federal-only obligation.

You have two choices about when to report this income. You can report all of it in the year you redeem the bond, or you can report the interest year by year as the bond accrued it (called the accrual method). Most people report it all at once when they cash in the bond, because it is simpler. If you choose the accrual method, you must stick with it for all your savings bonds going forward. Talk to a tax professional if you are redeeming a large bond or if your income situation is complicated.

Know the penalties for cashing in too early

Series I bonds and Series EE bonds have different early-redemption rules. A Series EE bond has no penalty if you redeem it after holding it for at least one year. Before one year, you lose the last three months of interest. After one year, you get all the interest you earned.

A Series I bond has a steeper penalty: if you redeem it before five years of ownership, you lose the last three months of interest. This means if you bought a Series I bond two years ago and redeem it now, you forfeit three months of interest earnings. After five years, you can redeem with no penalty. Series HH bonds (if you own any) have their own rules — check the bond's documentation or call the Treasury at 844-284-2676 to confirm.

Decide whether to reinvest or use the money elsewhere

Once you have the cash, you face a choice: put it back into savings vehicles, or use it for something else. If you want to keep it safe and earning interest, compare what is available now. Current Series I bond rates change every six months (in May and November), so check TreasuryDirect.gov to see the current rate before deciding. High-yield savings accounts and certificates of deposit (CDs) also change rates frequently, so compare the current rate on a new bond against the rate a bank is offering for the same time horizon.

If you need the money for an expense or goal, use it for that. Savings bonds are meant to be a safe place to park money you do not need immediately, not a trap that forces you to keep money locked away. If you cashed in the bond because you needed access to the funds, that is the right decision.

Handle bonds registered to someone who has died

If you are redeeming a bond that was registered to a deceased person, the process is more involved. You will need to provide the bank or Treasury with a certified copy of the death certificate and proof that you are authorized to act on the estate (usually a letter of testamentary or court order). Some banks will not handle this and will direct you to the Treasury's mail-in process instead.

Mail redemptions go to the Bureau of the Fiscal Service, Parkersburg, WV 26106-1328. Include the bond, the death certificate, your authorization documents, and a letter explaining what you are requesting. Processing takes several weeks. If the bond was jointly registered (two names on it), the surviving owner can usually redeem it more simply — ask the bank what documents they need.

Track what you have and when bonds mature

If you own multiple bonds and are not sure when they mature or what they are worth, log into TreasuryDirect.gov and view your account. It shows every bond you own, the purchase date, the current value, and the final maturity date. If you own paper bonds (physical certificates), you can look up their value on the same website by entering the series, denomination, and serial number.

Bonds do not stop earning interest at final maturity — they simply stop accruing new interest. A Series EE bond reaches final maturity 30 years after purchase. A Series I bond reaches final maturity 30 years after purchase as well. After that date, the bond is worth only what it was worth on the maturity date, so there is no reason to hold it any longer. Redeem it and move the money somewhere it can still grow.

Frequently Asked Questions

Can I redeem a savings bond before it matures?

Yes. Series EE bonds can be redeemed after one year with no penalty. Series I bonds can be redeemed at any time, but if you redeem before five years, you lose the last three months of interest. Both bonds must be held for at least one year before any redemption is allowed.

Do I have to pay state taxes on savings bond interest?

No. Savings bond interest is exempt from state and local income tax. You owe only federal income tax on the interest earned. This is one reason savings bonds are sometimes used for education savings — the tax treatment is favorable compared to other investments.

What happens if I lose a paper savings bond?

Contact the Treasury immediately at 844-284-2676 or visit TreasuryDirect.gov. You will need to file a claim with proof of ownership (purchase receipt, bank records, or other documentation). The Treasury can issue a replacement, but the process takes time. This is another reason to keep bonds in a TreasuryDirect account instead of as paper certificates.

Should I redeem my old Series HH bonds?

Series HH bonds stopped being issued in 2004 and are no longer earning interest after their final maturity date. If you own one that has matured, redeeming it and moving the money to a current Series I bond or high-yield savings account makes sense. Check the maturity date on your bond or in your Treasury records first.