SAVINGS BONDS: HOW SERIES E, EE, AND I BONDS WORK
Savings Bonds are non-marketable securities issued by the U.S. Treasury Department. Effective January 1, 2012, Series EE and I Savings Bonds can only be purchased electronically via The U.S. Treasury Department. Please read through this section to discover the tax advantages, liquidity, penalties, and rates of Series EE and I Bonds.
You can redeem paper savings bonds for cash at various financial institutions or agencies, such as banks or credit unions. Call ahead to find out if the organization services savings bonds (and the daily redemption limits). Savings bond interest is exempt from state and local income taxes. Interest earned is subject to federal and estate taxes. You receive the interest on Series E, EE and I Bonds when you redeem them.
SavingsBonds.com offers a comprehensive website and Information Center, along with a complimentary Savings Bond Calculator and personalized, easy to understand, color-coded Savings Bond Inventory Report. The Inventory Report indicates current cash-in values, detailed financial information such as interest rates, timing, taxation and maturity information on each bond, along with a “what this means to you” summary on paper savings bonds.
Series I Bonds
Series I bonds combine a fixed rate with a variable index-linked component. The fixed minimum rate remains the same for the life of the bond while the index-linked (variable) side is adjusted every six months to track the inflation rate as computed using the Consumer Price Index. The total or “composite” rate on the I Bond is updated every six months to reflect the fixed rate in effect at purchase and the inflation adjustment announced in May and November.