Series I savings bonds stop earning interest 30 years after their issue month. A bond issued in June 1996, for instance, stopped accruing on June 1, 2026. After that date the bond holds its final value but grows no further, so any delay in cashing it means the money is sitting idle when it could be earning elsewhere. The Treasury does not send a reminder when your specific bond hits that mark, so tracking issue dates is on you.
The 30-Year Clock
Every I bond runs for a total of 30 years measured from the first day of its issue month. That span is built as a 20-year original maturity period plus an automatic 10-year extension; you do not need to file anything to get the extra decade of earnings.1eCFR. 31 CFR Part 359 – Offering of United States Savings Bonds, Series I
Interest accrues monthly and compounds semiannually. Every six months the Treasury folds the interest earned during that half-year back into the principal, so the next round of interest is calculated on a slightly larger base.2TreasuryDirect. I Bonds Once the 30-year window closes, that machinery shuts off. Holding the bond longer adds nothing.
How to Tell If Your Bond Has Already Stopped Earning
Paper bonds carry the issue date on the front of the certificate. Electronic bonds display it inside your TreasuryDirect account. If you own older bonds and are not sure whether they have matured, the Treasury’s online savings bond calculator will show the current value and confirm whether interest is still accruing.
If a bond is past 30 years, redeem it. The money is no longer working, and the interest that built up over those decades is already taxable in the year of final maturity whether you cash the bond or not, a point covered further down.
What Happens If You Cash In Before 30 Years
You cannot redeem an I bond during its first 12 months at all.3eCFR. 31 CFR 359.6 – When May I Redeem My Series I Bond Between one and five years, the Treasury takes the last three months of interest off your payout as an early-redemption penalty. A bond cashed at 18 months, for example, actually pays 15 months of interest.4eCFR. 31 CFR 359.7 – Interest Penalty for Early Redemption The penalty will never push your redemption value below what you originally paid.
After five full years, the penalty disappears entirely. Every dollar of interest earned through the month of redemption is paid out.4eCFR. 31 CFR 359.7 – Interest Penalty for Early Redemption If your bond is close to that five-year anniversary, waiting a few weeks avoids the three-month haircut.
One narrow exception to the 12-month lockup: if you live in an area under an active FEMA disaster declaration, the Treasury can let you cash a bond that is less than a year old. You either call the Treasury or submit a certified FS Form 5512 (for electronic bonds) or FS Form 1048 (for damaged or lost paper bonds), with “DISASTER” written on the form and envelope.5TreasuryDirect. Cashing Savings Bonds Affected by a Disaster
Time Your Redemption to the First of the Month
I bond interest is added to the bond’s value on the first day of each month.6TreasuryDirect. Questions and Answers About Series I Savings Bonds Cashing in on January 15 pays the same as cashing in on January 1. You get no partial credit for the extra two weeks. If you plan to redeem, do it on or shortly after the first of a month so that month’s interest lands in your account before the money moves out.
The same arithmetic matters when the three-month penalty still applies. Because the penalty is counted in whole months, redeeming on the second day of a month rather than the last day of the previous one can shift whether you lose two months or three months of interest. Count carefully from the issue date before picking a day.
Taxes When the Bond Matures or You Cash It
I bond interest is subject to federal income tax but exempt from state and local income taxes.7TreasuryDirect. Tax Information for EE and I Bonds It is taxed as ordinary income, not at the lower capital gains rate, so it stacks on top of your other earnings for the year.8Internal Revenue Service. Savings Bonds
You have two choices about when to report it. Most holders defer: you owe tax on all the accumulated interest in the year you cash the bond or the year it reaches final maturity, whichever comes first. The alternative is to report each year’s interest annually on that year’s return even though no cash has changed hands, which can make sense for a bond held in a low-earning child’s name.
Deferral has a catch. When a bond that has been growing for decades is finally cashed, the whole lump of interest lands on a single year’s return and can push you into a higher bracket. And at the 30-year mark, the Treasury issues a Form 1099-INT for that year’s accumulated interest whether or not you redeem the bond, because the interest is treated as received at maturity.7TreasuryDirect. Tax Information for EE and I Bonds Sitting on a matured bond does not delay the tax bill; it only delays access to the cash.
If your total taxable interest for the year is more than $1,500, you file Schedule B with your return.8Internal Revenue Service. Savings Bonds
Education Exclusion
You may be able to exclude I bond interest from federal tax entirely by using the proceeds for qualified higher education expenses, meaning tuition and required fees at an eligible institution or contributions to a 529 plan or Coverdell ESA. Room, board, and recreational courses do not qualify. The bond must have been issued after 1989, you must have been at least 24 before the issue date, you cannot file married filing separately, and the exclusion phases out at higher incomes. For 2026, the phase-out starts at $101,800 modified adjusted gross income for single filers and $152,650 for joint filers, ending at $116,800 and $182,650 respectively. You claim it on Form 8815.9IRS. Form 8815 – Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
How to Redeem
As of January 1, 2025, new I bonds are only issued in electronic form through TreasuryDirect,2TreasuryDirect. I Bonds but plenty of older paper certificates are still out there. The redemption path depends on which you hold.
Electronic Bonds
Log into TreasuryDirect, open the ManageDirect tab, and choose “Redeem securities” under Manage My Securities.10TreasuryDirect. How Do I…? Pick the bonds and confirm. Proceeds go to the bank account linked to your profile.
Paper Bonds
The simpler route is to bring the bond to a bank or credit union with valid government-issued identification. Most institutions will cash it on the spot, though some cap same-day amounts.
If your bank cannot handle it or you prefer to mail, complete FS Form 1522 and send the paper bonds to the Treasury Retail Securities Services address on the form.11TreasuryDirect. Cashing EE or I Savings Bonds When the total redemption exceeds $1,000, your signature has to be certified by a bank officer or other authorized certifying official before mailing.12Department of the Treasury, Bureau of the Fiscal Service. FS Form 1522 – Special Form of Request for Payment of United States Savings and Retirement Securities Mail processing generally takes several weeks, after which funds arrive by direct deposit or check.