How Do Series EE Bonds Work: Rates, Doubling, and Cashing In

Series EE savings bonds are low-risk securities issued by the U.S. Department of the Treasury that earn a fixed interest rate for up to 30 years and carry a federal guarantee to double in value after 20 years. To understand how Series EE bonds work, start with three facts: you buy them electronically at face value through TreasuryDirect, the rate is locked in on the day you purchase, and the government is the only party you ever buy from or redeem with. The minimum purchase is $25, and one Social Security Number can buy up to $10,000 in EE bonds per calendar year.

How the Interest Rate Works

Every EE bond issued since May 2005 earns a single fixed interest rate that the Treasury sets before your purchase and holds constant for the life of the bond, no matter what happens to market rates afterward.¹ For bonds issued from November 2025 through April 2026, that fixed rate is 2.50%.²

Interest is credited on the first day of each month and compounds semiannually, so every six months the interest earned so far starts earning interest of its own.¹ The earnings stay locked inside the bond until you cash it in. Unlike a savings account, nothing is paid out along the way.

The 20-Year Doubling Guarantee

The defining feature of an EE bond is the Treasury’s promise that after exactly 20 years it will be worth at least twice what you paid. If the fixed rate on your bond is too low to reach double value through ordinary compounding, the Treasury makes a one-time adjustment on the 20th anniversary to bring it up to the guaranteed amount.³ The guarantee applies to any EE bond issued since June 2003.⁴

Doubling over 20 years works out to an effective annual return of roughly 3.5%. At today’s 2.50% fixed rate, compounding alone will not get there, so someone buying a bond now can expect the Treasury to add the shortfall at year 20. When the fixed rate on offer is 3.5% or higher, the bond reaches double value on its own and no adjustment is needed.

What Happens After 20 Years

The bond does not stop earning at year 20. It continues accruing interest at the original fixed rate for another 10 years, unless the Treasury announces a different rate for that extended period.¹ Total lifespan is 30 years from the issue date, and interest stops entirely at that point.³

When an electronic EE bond reaches final maturity, the Treasury deposits the full value into your linked bank account automatically. Any older paper bond that has hit 30 years has to be submitted for payment; it earns nothing while it sits.

How to Buy EE Bonds

EE bonds are sold only through TreasuryDirect at treasurydirect.gov. Paper EE bonds are no longer available for purchase. Opening an account requires a Social Security Number, a U.S. address, a checking or savings account for electronic transfers, and an email address, and the Treasury can require additional authentication to protect the account.⁵

Once your account is set up, you can buy in any amount from $25 up to $10,000 per Social Security Number per calendar year, down to the penny.³ Bonds are sold at face value, so a $100 purchase gives you a $100 bond on day one.⁶

Choosing How the Bond Is Registered

At purchase you decide who owns the bond. You can hold it in your name alone, add a co-owner, or name a beneficiary. A co-owner (“WITH” registration) shares ownership with you and automatically becomes sole owner if you die; on an electronic bond, the first person named is the primary owner and controls the account. A beneficiary (“POD” registration) has no rights while you’re alive, so you keep full control of the bond, and only takes over if you die. You can change a beneficiary at any time without their consent. Neither a co-owner nor a beneficiary can be a business; both must be individual people.⁷

Gifts and Bonds for Minors

You can buy an EE bond as a gift by naming the recipient as owner during checkout and checking the “This Is A Gift” box. The bond sits in the Gift Box of your TreasuryDirect account for at least five business days before you can deliver it, and the recipient needs their own TreasuryDirect account to receive it.⁸ For a recipient under 18, a parent or primary financial supporter opens a Minor Linked Account inside their own TreasuryDirect account and manages it as custodian.⁹ The $10,000 annual limit follows the owner’s Social Security Number, so gift bonds count against the recipient’s cap, not the buyer’s.

Cashing In an EE Bond

You have to hold an EE bond for at least 12 months before you can redeem it, counted from the issue date rather than the delivery date on a gift.¹⁰¹¹ Cash it before it turns five and you forfeit the last three months of interest as a penalty, though the penalty can never reduce the bond below what you paid for it.¹² After five years, there is no penalty at all.

To redeem an electronic bond, sign in to TreasuryDirect, select the bond, and send the funds to your linked bank account. The transfer typically settles in a couple of business days.

Taxes on EE Bond Interest

Interest on EE bonds is subject to federal income tax but fully exempt from state and local income taxes.¹³ For someone in a high-tax state, that alone lifts the after-tax return.

You have two ways to report the interest. Most bondholders defer, reporting all the accumulated interest in the year they cash the bond or the year it reaches final maturity, whichever comes first. The alternative is reporting each year’s interest as it accrues, before you have received any cash. Whichever method you pick applies to all your savings bonds. If you defer and then redeem, the Treasury posts a 1099-INT to your TreasuryDirect account by January 31 of the following year.¹⁴

The Education Interest Exclusion

EE bond interest can be excluded from federal income tax entirely if the proceeds pay for qualified higher education expenses in the same year, meaning tuition and required fees at an eligible college, university, or vocational school. Room and board don’t count. Proceeds directed into a Coverdell ESA or 529 plan also qualify.¹⁵

Four conditions all have to be met:

You were at least 24 years old on the bond’s issue date.
You are not filing as married filing separately.
The expenses were paid the same tax year for you, your spouse, or a dependent.
Your modified adjusted gross income is below the annual limit. For 2026, the exclusion phases out between $101,800 and $116,800 for single filers, and between $152,650 and $182,650 for joint filers.

Claim the exclusion on IRS Form 8815.¹⁶ Bonds registered in a child’s name do not qualify; the owner claiming the exclusion has to be the taxpayer or the taxpayer’s spouse, not the student.

If the Owner Dies

When a bond is registered with a co-owner or a POD beneficiary, the surviving person automatically becomes sole owner, and no probate is needed to move the bond over.⁷ Without a co-owner or beneficiary, the bond becomes part of the estate and moves through whatever process the estate uses.¹⁷

Taxes on the accumulated interest depend on what the original owner did. If they reported interest annually while alive, the heir only owes tax on interest earned after the death. If they deferred, the executor can either include all the pre-death interest on the deceased person’s final return or pass the full liability along; if the executor doesn’t make that election, the heir eventually owes tax on the entire lifetime interest in the year the bond is redeemed or matures.¹⁸

1
eCFR. 31 CFR Part 351 Subpart B – Maturities, Redemption Values, and Investment Yields of Series EE Savings Bonds
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TreasuryDirect. Fiscal Service Announces New Savings Bonds Rates
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TreasuryDirect. EE Bonds
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TreasuryDirect. EE Bonds May 2005 and Later
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eCFR. Regulations Governing Securities Held in TreasuryDirect
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Investor.gov. Savings Bonds
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TreasuryDirect. Registering Your Savings Bonds
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TreasuryDirect. How to Buy Gift Savings Bonds in TreasuryDirect
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eCFR. 31 CFR 363.27 – Accounts for Minors
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TreasuryDirect. Cashing EE or I Savings Bonds
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TreasuryDirect. Minimum Holding Period for Savings Bonds Extended to 12 Months
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eCFR. 31 CFR Part 351 – Offering of United States Savings Bonds, Series EE
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eCFR. 31 CFR Part 351 – Offering of United States Savings Bonds, Series EE – Appendix: Tax Considerations
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TreasuryDirect. Tax Information for EE and I Bonds
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TreasuryDirect. Using Bonds for Higher Education
16
Internal Revenue Service. Form 8815 – Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
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TreasuryDirect. Non-Administered Estates
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Internal Revenue Service. Chief Counsel Advice Memorandum on Testamentary Transfer of Series EE Savings Bonds