Key Takeaways
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The first Series I savings bonds were issued in September 1998 and stop earning interest 30 years later, in September 2028.
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An owner who never reported the interest owes federal tax on all of it in the year the bond matures, whether or not the bond has been cashed.
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A hypothetical retiree with $40,000 of unreported interest would owe $8,800 at an assumed 22% rate, with no state or local tax on top.
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Cashing some bonds in 2026 and 2027 spreads the interest over more tax years, which helps most when one big year would push part of it into a higher bracket.
I bonds are back in fashion. The Treasury’s new rate is 5.51% for bonds issued from Nov. 1, 2026, to April 30, 2027, up from 4.26%. That’s a lot more than most savings accounts pay.
But if you bought I bonds when they were brand new, you may have a big tax bill coming in less than two years.
The oldest I bonds hit 30 in September 2028
The Treasury first issued I bonds in September 1998, and an I bond earns interest for 30 years. So the very first ones mature in September 2028, and every later batch follows on its own 30th birthday: 1999’s bonds in 2029, 2000’s in 2030, and so on. Most owners have never paid a cent of tax on that interest, since the IRS lets them hold off reporting it until the year they cash the bond or it matures, whichever comes first. (Owners who chose to report the interest every year have been paying as they go.) For the oldest bonds, 2028 is the end of the line.
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Nobody has to cash them for the tax to hit
Suze Orman spent a good chunk of her Nov. 8 episode of Suze Orman’s Women & Money on I bonds, including what happens to owners who forget to redeem them. At 30 years, she said, electronic I bonds are “automatically redeemed for you,” and the money goes into a TreasuryDirect account that pays no interest. And whether or not you lift a finger, “They become taxable to you as ordinary income in that year.”
The 1998 bonds work a little differently, since the Treasury didn’t sell I bonds electronically until 2002. TreasuryDirect doesn’t cash a matured paper bond for you. It just stops earning interest. But the IRS taxes the interest in the year the bond matures, whether it’s been cashed or it’s still sitting in a drawer. That interest is everything the bond gained over what you paid for it, and that’s three decades of it.
