Your EE bonds will mature in 20 years, according to the US Treasury, but some will mature sooner. It is dependent on the interest rate that is integrated into their system.
When is the best time to cash in my EE Savings Bonds?
In about 30 years, most savings bonds stop earning interest (or achieve maturity). A savings bond can be redeemed as soon as one year after purchase, but it’s normally best to wait at least five years so you don’t miss out on the last three months of interest. If you redeem a bond after 24 months, for example, you will only receive 21 months of interest. It’s usually better to wait until your bond reaches full maturity, depending on the interest rate and your individual financial demands.
Is it necessary to redeem EE bonds when they reach maturity?
Do you have any savings bonds or marketable Treasury securities that have reached the end of their maturity period and are no longer earning interest? If that’s the case, now might be an excellent moment to start.
Cash them in and put the money toward a project or a financial necessity, or put it back to work in a new investment.
Note: Are you unsure whether you have an older bond that has stopped paying interest? Make use of our Treasury.
To see if any bonds are listed in the database, use the Hunt search engine. If that’s the case, you’ll be given instructions on how to claim and cash them, but
You won’t be able to convert them to an electronic format. If you already have your bonds, proceed to the next step. (The Treasure Hunt is updated on a monthly basis.)
Note: While you must take steps to cash any paper securities you may have, the bonds you possess in TreasuryDirect are not subject to this requirement.
On the day they mature, they are automatically cashed and no longer accrue interest. Go to your TreasuryDirect account to check the status of a security.
Account with TreasuryDirect. The following information is aimed for owners of paper securities (those held outside of TreasuryDirect).
Do EE bonds have a 20-year or 30-year maturity?
Series EE savings bonds likewise have a 30-year maturity. They will collect interest until they are redeemed, just like I bonds. There are two major differences between Series EE bonds and Series I bonds:
- They have a fixed rate of interest for the duration of the bond. The current annual rate is 0.10 percent.
- After 20 years of ownership, they give a one-time adjustment to double the face value.
Series HH bonds were previously issued savings bonds with a 20-year maturity. Since the final HH bonds were issued in August 2004, the last batch will mature in August 2024.
Because of the nature of savings bond math (more on this later), it’s best to keep your savings bonds for as long as you can to benefit from accrued and compound interest. Allowing your bond to appreciate in value over time is a wise decision, which is why you should only invest in savings bonds that you can live without for a period of time.
Accrued and compound interest
In the realm of savings bonds, “accrued” is merely another word for “accumulated.” Your bonds start earning interest the moment you buy them. Your bond’s value will increase on the last day of each month by the amount of interest you owe for the time you’ve owned the bond.
After 30 years, how much is a $50 EE savings bond worth?
Savings bonds are regarded as one of the most secure investments available. The underlying principle is that the value of a savings bond grows over time, but it’s easy to lose track of how much it’s worth over time.
The TreasuryDirect savings bond calculator, fortunately, makes determining the value of a purchased savings bond a breeze. You’ll need the bond series, face value, serial number, and issuance date to figure out how much your savings bond is worth.
If you bought a $50 Series EE bond in May 2000, for example, you would have paid $25. At maturity, the government committed to repay the face amount plus interest, bringing the total value to $53.08 by May 2020. A $50 bond purchased for $25 30 years ago is now worth $103.68.
After 30 years, what happens to EE bonds?
Interest is paid on EE bonds until they reach 30 years or you cash them in, whichever comes first. After a year, you can cash them in. However, if you cash them before the 5th year, you will forfeit the final three months’ interest.
What is the best way to avoid paying taxes on EE bonds?
Cashing your EE or I bonds before maturity and using the money to pay for education is one strategy to avoid paying taxes on the bond interest. The interest will not be taxable if you follow these guidelines:
- The bonds must be redeemed to pay for tuition and fees for you, your spouse, or a dependent, such as a kid listed on your tax return, at an undergraduate, graduate, or vocational school. The bonds can also be used to purchase a computer for yourself, a spouse, or a dependent. Room and board costs aren’t eligible, and grandparents can’t use this tax advantage to aid someone who isn’t classified as a dependent, such as a granddaughter.
- The bond profits must be used to pay for educational expenses in the year when the bonds are redeemed.
- High-earners are not eligible. For joint filers with modified adjusted gross incomes of more than $124,800 (more than $83,200 for other taxpayers), the interest exclusion begins to phase out and ceases when modified AGI reaches $154,800 ($98,200 for other filers).
The amount of interest you can omit is lowered proportionally if the profits from all EE and I bonds cashed in during the year exceed the qualified education expenditures paid that year.
What happens when Series EE bonds reach their maturity date?
You might have some Series EE savings bonds that you acquired a long time ago. Maybe you keep them in a filing cabinet or a safe deposit box and just think about them once in a while. You might be curious in how EE bond interest is taxed or when they stop earning interest. If they reach their final maturity date, you may need to take steps to avoid any losses or unexpected tax penalties.
Interest deferral on savings bonds
The interest rate for Series EE Bonds issued after May 2005 is set. A variable market-based rate of return is earned on bonds purchased between May 1997 and April 30, 2005.
Bonds in the Paper Series EE were sold for half their face value. If you possess a $50 savings bond, for example, you paid $25 for it. Until the bond matures, it isn’t worth its face value. (EE bonds are no longer issued in paper form by the US Treasury Department.) Electronic Series EE Bonds are sold at face value and are redeemable for their full face value.
The minimum duration of ownership is one year, however if the bond is redeemed during the first five years, a penalty is levied. The bonds pay interest for a period of 30 years.
How savings bonds are taxed
Currently, Series EE bonds do not pay interest. Instead, the accumulated interest is represented in the bond’s redemption value. Tables of redemption values are published by the US Treasury.
Unless the owner elects to have it taxed annually, interest on EE bonds is not taxed as it accrues. If you make an election, you must disclose any previously accrued but untaxed interest in the election year. The majority of the time, this option is not made, therefore bondholders do not profit from tax deferral.
If the option to report interest annually is selected, it will apply to all future savings bonds. That is to say, the choice cannot be made bond by bond or year by year. There is, however, a method that can be used to cancel the election.
If the election is not made, when the bond is redeemed or otherwise disposed of, all of the accrued interest is finally taxed (unless it was exchanged for a Series HH bond). Even after achieving face value, the bond continues to earn interest, but at “final maturity” (after 30 years), interest ceases accruing and must be recorded.
Note that the interest on EE savings bonds is not taxed by the state. You may be able to avoid paying federal income tax on your interest if you use the money for higher education.
Deferral on savings bonds
One of the most compelling reasons to purchase EE savings bonds is the ability to accumulate interest without having to disclose or pay tax on it. Unfortunately, the law prevents this tax-free accumulation from continuing indefinitely. The bonds stop earning interest when they reach their final maturity date.
After 30 years, the Series EE bonds issued in January 1989 achieved their final maturity in January 2019. Not only have they stopped earning interest, but all of the accrued but untaxed interest will be taxable in 2019.
When you cash in your savings bonds, do you have to pay taxes?
State and local taxes are not levied on savings bonds. You don’t get your interest until you redeem your bonds, so you can defer paying taxes until then, however you can choose to pay taxes on the interest you’ve earned every year. Bond interest is taxed at your marginal tax rate by the government. You must pay a 3.8 percent Medicare tax based on your investment income or the amount of adjusted gross income that exceeds the mentioned levels if you earn more than $200,000 as an individual or $250,000 as a couple. For the purposes of calculating your Medicare tax, savings bond interest is included in your investment income. You cannot redeem savings bonds during the first year of ownership, and if you do so within the first five years, you will be charged three months’ interest.
When I cash in my savings bonds, will I receive a 1099?
On January of the following year, 1099-INTs are posted in TreasuryDirect. Use the ManageDirect page’s URL.
If you cash at a bank, the paperwork is provided. The bank may give you the form right away or mail it to you later, maybe after the year in which you cash the bond has ended.
If you cash with Treasury Retail Securities Services, the form will be mailed to you in January of the following year.
Are EE bonds still doubling in value?
For EE bonds issued from November 2021 to April 2022, the yearly interest rate is 0.10 percent. Regardless of the interest rate, the bond will be worth twice as much after 20 years. We will make a one-time modification to satisfy this guarantee if you maintain the bond for that long.
EE bonds, which were originally issued in May 2005, generate interest until they reach the age of 30 years or you cash them in, whichever comes first. They are paid at a set interest rate. EE bonds earn the same fixed rate for the first 20 years that was specified when the bond was issued. For the last 10 years of an EE bond’s 30-year existence, we may adjust the rate or the way the bond earns income. If we want to make a change, we must do so before the 10-year period begins. (This is not the same as the interest paid on Series I bonds.) EE bonds are compared to I bonds.)