You can redeem a Series I savings bond starting 12 months after its issue date. If you cash it in before it turns five years old, you give up the last three months of interest as a penalty. Hold it for five years or longer and you collect every dollar of interest it has earned, right up to the 30-year mark when the bond stops paying.
The 12-Month Lockout
For the first year after the issue date, the bond is off limits. Under 31 CFR § 359.6, any I bond issued on or after February 1, 2003 cannot be cashed until at least 12 months have passed.1eCFR. 31 CFR 359.6 – When May I Redeem My Series I Bond A bond bought in March 2025 can’t be touched until March 2026. There are no partial withdrawals during that window, no hardship request you can file on your own, and no workaround.
The one exception is a federally declared disaster. The Treasury has authority under 31 CFR § 359.70 to waive program provisions to relieve unnecessary hardship, and it uses that authority to lift the 12-month rule for bondholders in disaster-affected areas.2eCFR. 31 CFR Part 359 – Offering of United States Savings Bonds, Series I – Section: 359.70 In July 2025, for example, the Treasury waived the holding period for savings bond owners affected by severe storms and flooding in parts of West Virginia.3TreasuryDirect. Fiscal Service Aids Savings Bonds Owners in West Virginia Affected by Severe Storms Outside those specific declarations, the one-year rule is absolute.
The Three-Month Interest Penalty Before Year Five
Cash the bond anytime between month 12 and the fifth anniversary and you forfeit the last three months of interest. Treasury applies this automatically. A bond cashed at 18 months pays 15 months of interest. A bond cashed at 4 years and 11 months pays interest through month 56.4TreasuryDirect. I Bonds
The value you see in your TreasuryDirect account and in the Treasury’s savings bond calculator already has the penalty baked in for any bond under five years old, so the number on screen is what actually lands in your bank account. The moment the bond crosses its fifth birthday, the penalty is gone for good and you collect the full accrued interest.4TreasuryDirect. I Bonds
Whether the three-month hit is painful depends on the rate environment. During high-inflation stretches, three months of I bond interest is real money. In low-inflation periods, the penalty can be trivial. Run the numbers before you decide whether to wait a few more months.
Pick the Right Day of the Month
I bonds start earning interest on the first day of the month they were issued. Interest accrues monthly and compounds every six months.5TreasuryDirect. I Bonds Interest Rates Because interest posts on the first, redeeming on February 5 versus February 25 makes no difference to what you receive. You already have February’s interest, and March’s won’t post until March 1. Redeem early in the month to get your cash sooner without leaving any interest behind.
How to Actually Cash an I Bond
Electronic Bonds in TreasuryDirect
Log in to TreasuryDirect, go to ManageDirect, and select the bond. You choose full or partial redemption, confirm the linked bank account, and submit.6TreasuryDirect. Redeem Savings Bonds Funds usually arrive within a few business days.
Partial redemptions are a genuine advantage of the electronic format. You can cash any amount you want as long as at least $25 stays in the bond.7TreasuryDirect. Converting EE or I Paper Bonds to Electronic Bonds That’s useful when you need some cash but don’t want to trigger tax on the whole accrued interest at once.
Paper Bonds at a Bank
Some banks and credit unions redeem paper savings bonds; many don’t, and none are required to. Federal Reserve guidance leaves the call to each institution, and many require you to have been a customer for at least 12 months before they’ll cash bonds for you.8Federal Reserve Financial Services. Savings Bond Redemptions Frequently Asked Questions Call first. Bring valid photo ID. Expect a cap on how much they’ll cash in one visit.
Paper Bonds by Mail
If no local bank will help, you send the bonds to Treasury Retail Securities Services at P.O. Box 9150, Minneapolis, MN 55480-9150, along with FS Form 1522.9TreasuryDirect. FS Form 1522 – Special Form of Request for Payment The form asks for serial numbers, issue dates, your Social Security number, and the bank routing and account numbers for direct deposit.
Signature requirements depend on the amount:
- For $1,000 or less in total redemption value, sign the form and enclose a copy of your driver’s license, passport, state ID, or military ID.
- For more than $1,000, sign in front of a notary or other authorized certifying officer.9TreasuryDirect. FS Form 1522 – Special Form of Request for Payment
Authorized certifying officers include notaries, officers at banks and credit unions, commissioned military officers, and U.S. court clerks.10TreasuryDirect. Signature Certification Notary fees are state-regulated and typically run $2 to $25 per signature.
Plan for at least six weeks of processing time after Treasury receives your package. An error in the routing or account number adds more weeks, so double-check both before you seal the envelope.
The Tax Bill You’ll Trigger
I bond interest is subject to federal income tax and exempt from state and local income tax.11TreasuryDirect. Tax Information for EE and I Bonds Most owners defer federal tax until redemption, which is the default. You get a Form 1099-INT for the year you cash the bond, covering the entire lifetime of interest.
The alternative is reporting each year’s accrued interest annually, even though you haven’t received any cash. That sometimes makes sense for bonds in a low-earning child’s name. Switching from deferral to annual reporting doesn’t need IRS approval, but you have to switch for every savings bond tied to your Social Security number and report all previously unreported interest in the year you switch. Reversing the change later requires IRS Form 3115.11TreasuryDirect. Tax Information for EE and I Bonds
If you’ve deferred for a decade or more, cashing a big bond can push you into a higher bracket for the year. Staggering redemptions across tax years softens the hit. Banks that cash paper bonds issue the 1099-INT themselves; for TreasuryDirect redemptions, the form appears in your account by January 31 of the following year.11TreasuryDirect. Tax Information for EE and I Bonds
There is a narrow exclusion for qualified higher education expenses under 26 U.S.C. § 135, but it comes with strict conditions: you must have been at least 24 when the bond was issued, the money must go to tuition and fees (or a 529 or Coverdell) in the same year, and the exclusion phases out at modest income levels. For 2026, it starts phasing out at $101,800 for single filers and $152,650 for joint filers, disappearing entirely at $116,800 and $182,650 respectively.12IRS. Revenue Procedure 2025-3213Office of the Law Revision Counsel. 26 USC 135 – Income From United States Savings Bonds Used to Pay Higher Education Tuition and Fees You claim it on IRS Form 8815. Married filing separately is disqualifying. Bonds titled in a child’s name don’t qualify.
Don’t Miss the 30-Year Deadline
I bonds have a 30-year total lifespan: 20 years of original maturity plus a 10-year extension.14eCFR. 31 CFR 359.5 – What Is the Maturity Period of a Series I Savings Bond After 30 years the bond stops earning interest. Treasury does not roll it over.
For electronic bonds, Treasury issues a 1099-INT in the year the bond reaches final maturity, reporting all previously unreported interest.11TreasuryDirect. Tax Information for EE and I Bonds The tax bill lands whether you’ve cashed the bond or not. If you have bonds nearing 30 years, redeem them on your own schedule rather than letting a forgotten certificate hand you a surprise at tax time.