There is no federal fine or statutory penalty for not cashing matured savings bonds, but the practical penalties for holding one are real: the bond stops earning interest the day it matures, the IRS treats all of the accumulated interest as taxable income in the maturity year whether you redeem the bond or not, and inflation quietly chips away at what’s left. If a 1099-INT is issued and you fail to report that interest, then actual IRS penalties do apply on top of the tax you already owe.
Has Your Bond Actually Matured?
Every savings bond has a final maturity date set by the Treasury. After that date, the interest rate drops to zero permanently.
- Series EE bonds stop earning 30 years from the issue date. Bonds issued in the mid-1990s are reaching final maturity now, and more will follow each year through the 2050s.1TreasuryDirect. EE Bonds
- Series I bonds also stop earning at 30 years. The earliest I bonds, issued in September 1998, reach final maturity in 2028.2TreasuryDirect. I Bonds Interest Rates
- Series HH bonds matured after 20 years. The last HH bonds were issued in August 2004, so every one has now reached final maturity.3TreasuryDirect. Cashing HH Savings Bonds
- Series E and H bonds all matured years ago. The last Series E bonds (issued 1980) reached final maturity by 2010, and the last Series H bonds (issued 1979) matured by 2009.
If you’re not sure, the TreasuryDirect Savings Bond Calculator gives the exact maturity date, current value, and total interest earned for any Series EE, E, or I bond.4TreasuryDirect. Savings Bond Calculator
The Tax Bill Arrives Whether You Cash the Bond or Not
This is the trap most bondholders don’t see coming. If you’ve been deferring the interest on your Series EE, E, or I bonds — which nearly everyone does by default — the IRS considers all of that accumulated interest to be taxable income in the year the bond reaches final maturity. It doesn’t matter whether you actually redeem it.5TreasuryDirect. Tax Information for EE and I Bonds
The Treasury issues a 1099-INT for the maturity year, reporting all previously untaxed interest under the owner’s Social Security number.5TreasuryDirect. Tax Information for EE and I Bonds That interest goes on your federal return as ordinary income. For 2026, federal brackets run from 10% up to 37%, with the top rate hitting single filers above $640,600 and joint filers above $768,700.6Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Savings bond interest is exempt from state and local income tax.1TreasuryDirect. EE Bonds
The real problem is lump-sum recognition. A bond held for 30 years can carry $8,000 or $15,000 in accrued interest, and every dollar of it lands on one tax return. That spike can push you into a higher bracket for the year, raising the rate on your other income too. Someone ordinarily in the 22% bracket might end up paying 24% or more on part of that interest.
Series H and HH bonds work differently. They paid interest semiannually by check or direct deposit, and it was taxed each year as it was received, so there’s no big deferred lump waiting at maturity. The exception: if older E or EE bonds were exchanged into HH bonds before that program ended in 2004, the deferred interest from the original bonds carried forward and becomes taxable when the HH bond matures, is redeemed, or is disposed of.7eCFR. 31 CFR Part 352 – Offering of United States Savings Bonds, Series HH
IRS Penalties if You Ignore the 1099-INT
Because the 1099-INT is filed with the IRS at the same time it’s mailed to you, the agency will eventually match it against your return. Leaving that interest off triggers standard penalties:8Internal Revenue Service. Penalties
- Accuracy-related penalty of 20% of the underpayment when you understate your income.9Internal Revenue Service. Section 10 – Penalties and Interest Provisions
- Failure-to-pay penalty of 0.5% of the unpaid tax per month, up to 25%.
- Failure-to-file penalty of 5% per month if you skip filing altogether, up to 25%.9Internal Revenue Service. Section 10 – Penalties and Interest Provisions
Interest on the unpaid amount also accrues from the original due date. So while the act of not cashing the bond carries no penalty, the act of not reporting the deemed interest income absolutely does.
What Idle Money Actually Costs You
A matured savings bond earns exactly 0%. Every day it sits unredeemed, you’re passing up whatever that principal could earn in a high-yield savings account, a short-term Treasury bill, or anywhere else. Over several years that lost interest adds up.
Inflation makes the picture worse. When your money earns nothing, its purchasing power shrinks by roughly the annual inflation rate. If inflation runs 3% for five years after your bond matures, you’ve effectively lost about 15% of what that money could buy. No fine is being levied, but the outcome resembles one.
Paper Bonds and Escheatment
Paper bonds sitting in a drawer for decades are exposed to loss, theft, fire, and water damage. There’s also a newer risk: under the SECURE 2.0 Act, the Treasury is required to share information about unredeemed savings bonds with state governments. An “applicable savings bond” for this purpose is one that is more than three years past its final maturity date, is in paper form (or electronic without valid bank account information on file), and hasn’t been redeemed.10TreasuryDirect. 2024 Report to Congress Under the SECURE 2.0 Act of 2022 States then use their unclaimed property programs to locate owners.
The money isn’t lost if a state takes custody. You can still claim it, but instead of a straightforward Treasury redemption, you’ll go through your state’s unclaimed property process, which typically requires proof of identity, proof of ownership, and patience. The Treasury Hunt online search tool was retired on September 30, 2025; searches for unclaimed Treasury securities now go through state programs at unclaimed.org.11TreasuryDirect. Treasury Hunt
How To Cash a Matured Bond Now
If your bonds are held electronically, log into TreasuryDirect, select the bond, choose full or partial redemption, and submit. The funds are deposited into your linked bank account.12TreasuryDirect. Redeem Savings Bonds
For paper bonds, most banks will cash them for their own customers with valid identification. The Secret Service recommends that financial institutions require customers to have held an account for at least 12 months before redeeming bonds, and some banks enforce this or similar policies.13Federal Reserve Financial Services. Savings Bond Redemptions Frequently Asked Questions Banks aren’t required to cash bonds for non-customers. If your bank won’t process the bond, or the value exceeds its transaction limits, mail the bond to Treasury Retail Securities Services, P.O. Box 214, Minneapolis, MN 55480-0214.
Matured Bonds From a Deceased Owner
Inherited bonds add a layer. If the total redemption value of all Treasury securities belonging to the deceased is $100,000 or less as of the date of death, a family member can redeem them without probate. The person acting as voluntary representative must be at least 18 and must be a blood relative, legally adopted child, or surviving spouse.14eCFR. 31 CFR Part 315 Subpart L – Deceased Owner, Coowner or Beneficiary
The voluntary representative files FS Form 5336 with certified copies of the death certificate. The form must be signed before a certifying officer, though for paper savings bonds a notary is sufficient, and everything gets mailed to Treasury Retail Securities Services.15TreasuryDirect. Disposition of Treasury Securities Belonging to a Decedent’s Estate Being Settled Without Administration (FS Form 5336) If the total exceeds $100,000, the estate must go through court administration first.14eCFR. 31 CFR Part 315 Subpart L – Deceased Owner, Coowner or Beneficiary
The tax doesn’t disappear at death. Whoever ultimately receives the interest income has to report it, whether that’s the estate or the beneficiary. If the deceased was deferring the interest, the full amount becomes reportable on someone’s return in the year of redemption or maturity, whichever comes first.16Internal Revenue Service. Savings Bonds 1