What Is a Series EE Bond?
The Series EE Bond (often referred to as a "Patriot Bond") is a non-marketable, interest-bearing U.S. government savings bond. These bonds are guaranteed to at least double in value over the typical 20-year initial term. Some Series EE bonds have total interest-paying lives that extend beyond the original maturity date, up to 30 years from issuance. Coupon rates for Series EE Bonds are determined at the time of issuance and are based on the percentage of the long-term Treasury rates.
Key Takeaways
- Series EE Bonds are interest-bearing U.S. government savings bonds guaranteed to at least double in value over their typical 20-year initial terms.
- Some Series EE bonds pay interest beyond the original maturity date, up to 30 years from issuance.
- There is a $25 minimum investment requirement for EE bonds.
- Every investor may purchase up to $10,000 in these bonds each calendar year.
How a Series EE Bond Works
Along with the Series I bond, the Series EE bond is one of the two types of savings bonds issued by the US Treasury. Series EE bonds cannot be bought or sold in the open market, and are hence classified as non-marketable securities.
Series EE bonds issued after May 2005 are assigned semi-annual fixed coupon rates on May 1 and November 1. The rates apply to all issuances for the ensuing six months. Bonds issued after each date increase in value monthly, but interest payments are handed out semiannually.
Series EE bonds are considered ultra-safe, low-risk investments, whose interest is typically exempt from state and local taxes. However, they are subject to federal taxes, but only in the year in which the bond matures or is redeemed. EE Bonds may be purchased by U.S. citizens, official U.S. residents, minors, and all U.S. government employees—regardless of their citizenship status.
Special Considerations
Paper EE bonds were re-issued as "Patriot Bonds" after the Sept. 11, 2001, terrorist attacks. They are identical in every way to the paper Series EE Bonds except that any paper bonds purchased through a financial institution after Dec. 10, 2001, have the words "Patriot Bond" printed on the top half of the bond certificate, situated between the Social Security Number (SSN) and the issue date. Financial institutions no longer issue Series EE bonds in paper form, but the paper Patriot Bonds can still be cashed or converted into electronic bonds.
Series EE bonds don't need to be reissued to correct small typographical errors in names, addresses, or Social Security numbers.
Requirements for a Series EE Bond
There is a $25 minimum investment requirement for EE bonds, and each investor may purchase up to $10,000 in these bonds each calendar year. Furthermore, bondholders must hold onto these investments for at least twelve months, before they can redeem the bonds. Those who redeem bonds within five years will be docked three months of accrued interest payments. Since EE bonds earn interest for up to 30 years, the longer they're held, the more they're worth.
Paper bondswere issued at a 50% discount to par, while bonds electronically sourced through TreasuryDirect are purchased at face value. The latter is still guaranteed to be worth twice their original value at first maturity date after 20 years while paying interest the same way as paper EE bonds.
FAQs
All Series EE Bonds reach final maturity 30 years from issue.
How do bonds work after maturity? ›
A bond's term to maturity is the period during which its owner will receive interest payments on the investment. When the bond reaches maturity, the owner is repaid its par, or face, value.
How much is a $100 EE savings bond worth after 30 years? ›
How to get the most value from your savings bonds
| Face Value | Purchase Amount | 30-Year Value (Purchased May 1990) |
|---|
| $50 Bond | $100 | $207.36 |
| $100 Bond | $200 | $414.72 |
| $500 Bond | $400 | $1,036.80 |
| $1,000 Bond | $800 | $2,073.60 |
May 7, 2024
U.S. Savings Bonds mature after 20 or 30 years, depending on the type of bond: Series EE bonds mature after 20 years. They are sold at half their face value and are worth their full value at maturity. Series I bonds are sold at face value and mature after 30 years.
How do I cash in matured EE bonds? ›
Through TreasuryDirect
- Download and complete FS Form 1522.
- Have your signature certified if the value of the bonds you are cashing is more than $1,000. See FS Form 1522 for more about this requirement.
- Mail the completed form and your bonds to the address listed on FS Form 1522.
Where do I cash in a savings bond? You can cash paper bonds at a bank or through the U.S. Department of the Treasury's TreasuryDirect website. Not all banks offer the service, and many only provide it if you are an account holder, according to a NerdWallet analysis of the 20 largest U.S. banks.
Do you get all your money back when a bond matures? ›
With a Series I savings bond, you wait to get all the money until you cash in the bond. Electronic I bonds: We pay automatically when the bond matures (if you haven't cashed it before then). Paper I bonds: You must submit the paper bond to cash it.
How do EE savings bonds work? ›
EE bonds earn interest monthly. Interest is compounded semiannually, meaning that every 6 months we apply the bond's interest rate to a new principal. The new principal is the sum of the prior principal and the interest earned in the previous 6 months.
What do you get at the end of a bonds maturity? ›
During the life of the bond or note, you earn interest at the set rate on the par value of the bond or note. The interest rate set at auction will never be less than 0.125%. If you still own the bond after 20 years or the note after seven years, you get back the face value of the security.
Do EE bonds really double in 20 years? ›
Yes, the government guarantees that EE bonds sold now will double in value in 20 years. If the bonds don't earn enough interest to double in value, the government will “add money at 20 years to make that happen,” according to TreasuryDirect.
While the Treasury will not penalize you for holding a U.S. Savings Bond past its date of maturity, the Internal Revenue Service will. Interest accumulated over the life of a U.S. Savings Bond must be reported on your 1040 form for the tax year in which you redeem the bond or it reaches final maturity.
How long until EE bonds stop earning interest? ›
EE and I bonds earn interest for 30 years from the issue date. HH bonds earn interest for 20 years from the issue date.
Can you lose money on a bond if you hold it until maturity? ›
All bonds carry some degree of "credit risk," or the risk that the bond issuer may default on one or more payments before the bond reaches maturity. In the event of a default, you may lose some or all of the income you were entitled to, and even some or all of principal amount invested.
How do I avoid taxes when cashing in savings bonds? ›
You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs. That includes expenses you pay for yourself, your spouse or a qualified dependent. Only certain qualified higher education costs are covered, including: Tuition.
Should you cash in bonds when they mature? ›
Depending on the interest rate of your bond and your own financial needs, it's generally beneficial to wait until full maturity to redeem them.
Is it a good time to cash in Series EE savings bonds? ›
You can get your cash for an EE or I savings bond any time after you have owned it for 1 year. However, the longer you hold the bond, the more it earns for you (for up to 30 years for an EE or I bond). Also, if you cash in the bond in less than 5 years, you lose the last 3 months of interest.
How long does it take a Series EE savings bond to reach face value? ›
Series EE bonds issued today will mature in 20 years, and they are guaranteed to double in value over that time.
Do you pay taxes on EE bonds when they mature? ›
Owners can wait to pay the taxes when they cash in the bond, when the bond matures, or when they relinquish the bond to another owner. Alternatively, they may pay the taxes yearly as interest accrues. 1 Most owners choose to defer the taxes until they redeem the bond.
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