I bond taxes
Series I (and EE) savings bond interest is subject to federal income tax only — it is exempt from all state and local income taxes. You can defer the federal tax until you redeem the bond or it matures at 30 years (the default), or elect to report interest annually. When you cash a bond, TreasuryDirect issues a Form 1099-INT. Interest can be fully tax-free if used for qualified higher-education expenses under the Education Savings Bond Program, subject to income limits. This is general information, not tax advice.
Source: TreasuryDirect. Data as of May 2026.
Savings bond tax rules at a glance
| Tax topic | Rule |
|---|---|
| Federal income tax | Yes — on the interest, when you redeem or at 30-year maturity. |
| State & local income tax | Exempt — savings bond interest is never taxed by states. |
| Tax timing | Defer until redemption/maturity (default), or report annually by election. |
| Tax form | IRS Form 1099-INT issued by TreasuryDirect in the year you cash. |
| Education exclusion | Interest can be tax-free if used for qualified higher-education expenses (income limits apply). |
Source: TreasuryDirect / IRS. Data as of May 2026.
The education exclusion
The Education Savings Bond Program lets you exclude I and EE bond interest from federal income tax if, in the year you cash the bonds, you pay qualified higher-education expenses (tuition and fees) for yourself, a spouse, or a dependent. Conditions include: the bondholder must have been at least 24 years old when the bond was issued, the bonds must be in the parent’s name (not the child’s), and your modified adjusted gross income must be below an annual phase-out. The exclusion is claimed on IRS Form 8815. Verify the current income limits with the IRS or a tax professional.
Frequently asked questions
Do you pay taxes on I bonds?
You pay federal income tax on the interest, but savings bonds are exempt from state and local income tax. You can defer the federal tax until you redeem the bond or it reaches final maturity at 30 years, or elect to report the interest annually.
Are I bonds tax-free for college?
They can be. Under the Education Savings Bond Program, interest on I and EE bonds can be excluded from federal income tax if used for qualified higher-education expenses in the same year, subject to income phase-out limits and other rules (the bondholder must be 24+ at issue, among other conditions). See IRS Form 8815.
When is I bond interest taxed?
By default, all the accrued interest is taxed in the year you cash the bond (or at 30-year maturity if you never cash it). Alternatively you can elect to report interest each year as it accrues — but once elected it applies to all your bonds.
Is I bond interest taxed by my state?
No. Interest on US savings bonds (including I and EE) is exempt from all state and local income taxes. Only federal income tax applies.
Related
Not investment or tax advice. BondValue is an independent reference, not affiliated with the U.S. Treasury or TreasuryDirect. Savings bond rates reset every 6 months (on May 1 and November 1), and any value shown here is an estimate. Verify current rates and the exact penny value of your bonds at TreasuryDirect’s official Savings Bond Calculator. Consult a qualified professional before making financial decisions.
Last updated: 2026-06-21