What Should I Do With Series E Savings Bonds?

Cash in your Series E savings bonds. Every Series E bond has reached final maturity and stopped earning interest, so the money is sitting still while inflation reduces what it can buy — look up the value on TreasuryDirect's Savings Bond Calculator, redeem the bonds at a bank or by mail, and move the proceeds somewhere that pays a yield.

Before you cash a large batch, work out the tax first. All the interest those bonds earned over decades becomes taxable in the year you redeem them, and redeeming everything at once can push you into a higher bracket. Spreading redemptions across tax years is the simplest way to avoid that.

If you inherited the bonds, the tax question is more complicated and worth settling before anything gets cashed, because who reports the interest depends on a choice made when the estate was handled.

Key Takeaways

• Every Series E bond has stopped earning interest. The last ones were issued in 1980 and reached final maturity in 2010, so nothing you hold is still growing.

• The bonds don't expire and can be cashed at any time. There's no deadline, but there's also no reason to wait.

• All the accrued interest is taxed in the year you redeem. It's federal income tax only, since savings bond interest is exempt from state and local tax.

• The education exclusion doesn't apply to Series E bonds. That tax break covers Series EE bonds issued after 1989 and Series I bonds only.

• Inherited bonds don't get a stepped-up basis. The accrued interest is taxed as ordinary income to whoever reports it, and there's no reset at the date of death.

• Use TreasuryDirect and nothing else to look up values. Sites offering to find or price your bonds for a fee are the most common scam in this area.

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What Exactly Is a Series E Savings Bond?

A Series E savings bond is a paper U.S. savings bond sold from 1941 through 1980, first to fund the war effort and later as a general savings program. The Treasury replaced it with the Series EE bond in 1980.

• They were sold at a discount, typically 75% of face value, and grew to face value and beyond through accrued interest.

• Bonds issued through November 1965 earned interest for 40 years. Bonds issued from December 1965 through June 1980 earned interest for 30 years.

• They exist only on paper, which is why most people find them in a drawer or a safe deposit box rather than an account.

Are My Series E Bonds Still Earning Interest?

No Series E bond is still earning interest. The final maturity date has passed for every bond in the series, whatever the issue date printed on the front.

• Bonds issued through November 1965 stopped earning in 2005 at the latest.

• Bonds issued from December 1965 onward stopped earning by 2010.

• A matured bond holds its value in dollars but earns nothing, so the balance loses purchasing power every year it sits.

Check the issue date on the bond, then run it through the Savings Bond Calculator to confirm both its value and that it has stopped earning.

How Do I Find Out What My Bonds Are Worth?

You find a Series E bond's value using TreasuryDirect's Savings Bond Calculator, which prices paper bonds when you enter the series, denomination and issue date.

• You need the physical bond or a record of its details. The serial number is optional for pricing.

• The figure it returns includes decades of accrued interest on top of what was originally paid.

• The calculator can save an inventory, so you can enter a stack of bonds once rather than repeatedly.

Use only TreasuryDirect.gov. Sites that offer to locate or value bonds for a fee are collecting your information, and the Treasury specifically warns about claims that a birth certificate number unlocks bonds held in your name.

How Do I Cash In a Series E Savings Bond?

You cash Series E bonds either at a bank that handles savings bond redemptions or by mailing them to Treasury Retail Securities Services with FS Form 1522.

• Bring the bonds and government-issued photo ID if you're going to a bank.

• Many banks only cash bonds for existing customers, and some have stopped handling them entirely, so call before making the trip.

• To redeem by mail, complete FS Form 1522 and send it with the bonds. Signatures must be certified if the redemption value exceeds $1,000.

• Payment from the Treasury arrives by direct deposit, so you'll need bank account details on the form.

Don't sign the bonds until you're in front of the teller or certifying officer, since a signed bond is treated like cash.

What Taxes Will I Owe When I Cash Them?

Series E interest is subject to federal income tax and exempt from state and local tax. Unless the interest was reported annually along the way, which almost nobody did, all of it becomes taxable in the year you redeem.

• You'll receive a Form 1099-INT for the full accrued interest.

• The interest is ordinary income, taxed at your regular rate rather than a capital gains rate.

• Only the interest is taxed. What was originally paid for the bond comes back tax-free.

• Cashing a large batch in one year can move you into a higher bracket, and can affect income-tested items like Medicare premiums.

Spreading redemptions across two or more tax years is the simplest way to keep a large batch from bunching into one return.

Can I Reduce the Tax on My Bonds?

You can't eliminate federal tax on Series E interest, but timing and estate handling can reduce what's owed.

• Redeem in a lower-income year, such as after retiring or during a year with large deductions.

• Split a large batch across tax years so the interest doesn't stack into one bracket.

• For inherited bonds, the executor can elect to report the accrued interest on the decedent's final return. When the decedent's rate is lower than the heir's, this saves real money — but the election has to be made before that return is filed and can't be added afterward.

The education exclusion doesn't help here. It applies only to Series EE bonds issued after 1989 and to Series I bonds, so no Series E bond qualifies no matter what the money is spent on.

What Should I Do With the Money After I Cash Them?

Put the proceeds somewhere that earns a return, matched to when you'll need the money rather than to whichever rate looks highest.

• A high-yield savings account for an emergency fund or anything you might need within the year

• A CD for money with a known date attached, once your emergency fund is already full

• Series I bonds if you want to stay in Treasury securities with inflation protection

• Paying down credit cards or other high-rate debt, which returns a guaranteed rate equal to the interest you stop paying

• Investing for goals at least five years out, if you're comfortable with the risk

Clearing high-rate debt usually beats every savings option here, since no deposit account pays what a credit card charges.

What if I Inherited These Bonds or Can't Find Them?

Inherited Series E bonds can be cashed or reissued, and lost bonds can be replaced, both through the Treasury with the right form and proof of entitlement.

• To have bonds reissued in an heir's name, submit FS Form 4000 with proof of legal entitlement.

• A named surviving co-owner or beneficiary can redeem at a participating bank, or through the Treasury using FS Form 5336 for small estates.

• A court-appointed representative uses FS Form 1455.

• For bonds that are lost, stolen or destroyed, FS Form 1048 requests a replacement. You'll need serial numbers, issue dates, denominations and the owner's Social Security number, plus a certified signature.

Settle the tax question before anything is cashed. Once an heir redeems the bonds, the choice about whose return reports the interest may already have been made by default.

Frequently Asked Questions

Are Series E savings bonds still worth anything?

Series E bonds are worth what was originally paid plus decades of accrued interest, and they can be redeemed for that full amount. They just aren't growing anymore, since every bond in the series has reached final maturity.

Do Series E bonds ever expire?

Series E bonds don't expire and have no redemption deadline. They were discontinued in 1980 and the last of them stopped earning interest in 2010, but they remain payable indefinitely.

How much tax will I pay when I cash a savings bond?

You'll owe federal income tax on the interest only, at your ordinary income rate, with no state or local tax. What you actually pay depends on your income that year and, for inherited bonds, on whether the estate already reported the interest.

Where can I cash old Series E bonds?

Many banks and credit unions redeem savings bonds for their own account holders, though fewer do it than used to, so call first. Otherwise, mail the bonds with FS Form 1522 to Treasury Retail Securities Services.

Can I convert paper Series E bonds to electronic ones instead of cashing them?

Converting a matured bond doesn't restore any interest, since final maturity has passed regardless of the form it's held in. For Series E specifically, redemption is the only step that changes anything.

Key Terms to Know

• Series E bond. A paper U.S. savings bond sold from 1941 to 1980, sold at a discount and now fully matured.

• Final maturity. The date a bond stops earning interest for good, after which its value no longer changes.

• Accrued interest. The interest a bond has earned but not paid out, which is added to its redemption value and taxed when you cash it.

• Form 1099-INT. The tax form reporting the interest paid to you when you redeem, which the IRS also receives.

• Income in respect of a decedent (IRD). Income the deceased earned but never paid tax on, including savings bond interest, which is taxed to whoever receives it rather than being reset at death.

• Stepped-up basis. The reset of an inherited asset's value to its date-of-death worth, which savings bonds do not receive.

• FS Form 1522. The Treasury form used to redeem paper savings bonds by mail.

• Education exclusion. A tax break for savings bond interest used for qualified higher education, limited to Series EE bonds issued after 1989 and Series I bonds.

Sources

• TreasuryDirect: Savings Bond Calculator

• TreasuryDirect: Using Savings Bonds for Education

• Internal Revenue Service: About Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989

• TreasuryDirect: I bonds