EE savings bonds
Series EE Savings Bonds (often called EE Bonds) are government savings bonds issued by the U.S. Treasury. First issued in 1980 as a replacement for the series E Savings Bonds, they have been offered ever since, though the rules applying to the bonds have changed several times. EE Bonds issued after May 2005 earn a fixed rate of interest based on the issue date of the bond. Other forms of treasury securities include I savings bonds and TIPS.
Rates and Terms
The rules governing EE Savings Bonds are complex, and have been changed several times since they were first issued. For more information, see EE/E Bonds Rates & Terms from TreasuryDirect. To find out what your bonds are worth today, use the Savings Bond Calculator or the Savings Bond Wizard.
Bonds issued after May 2005
EE Bonds issued after May 2005 earn a fixed rate in effect at the time of purchase. They must be held for a minimum of one year. Bonds redeemed within five years must pay a 3-month interest penalty. They are guaranteed to double in value in 20 years, which equals a guaranteed return of 3.5% a year. For more information, see rates and terms from TreasuryDirect.
Bonds issued between May 1997 and April 2005
EE Bonds issued between May 1997 and April 2005 earn 90% of the average yields on 5-year Treasury notes for the preceding six months. The rate is adjusted every six months. Bonds redeemed within five years must pay a 3-month interest penalty. EE Bonds issued between May 1995 and May 2003 are guaranteed to double in value in 17 years, which equals a guaranteed return of 4.16% a year. EE Bonds issued after June 1, 2003 are guaranteed to double in value in 20 years, which equals a guaranteed return of 3.5% a year. For more information, see rates and terms from TreasuryDirect.
Bonds issued between May 1995 and April 1997
EE Bonds issued between May 1995 and April 1997 earn a short-term rate in the first five years. Between five years and 17 years, the bonds earn a long-term rate. They are guaranteed to double in value in 17 years, which equals a guaranteed return of 4.16% a year. After 17-years, they earn the rates in effect at that time. For more information, see rates and terms from TreasuryDirect.
Bonds issued before May 1995
Before May 1995, all EE Bonds issued earned a graduated, fixed rate of interest for the first five years. After five years and until the maturity date, the bonds earned either the guaranteed minimum rate (determined by the date of issue) or a market-based rate, whichever was higher. For more information, see rates and terms from TreasuryDirect.
As of January 1, 2012, paper savings bonds are no longer sold. This action supports Treasury’s goal to increase the number of electronic transactions with citizens and businesses.
- Electronic versions of EE Bonds are available, limited to $10,000 per year per Social Security Number. Savings bonds purchased as gifts aren't included in your annual limit.
- EE Bonds are not marketable securities, meaning that, unlike other bonds and stocks, you cannot trade EE Bonds in the secondary market.
- EE Bonds are free from state and local taxation. (See below.)
Where to purchase
You can buy electronic EE Bonds at TreasuryDirect.
How to redeem
Those wishing to redeem paper savings bonds should first check their financial institution for redemption instructions. Bonds can also be redeemed by mail at the Treasury Retail Securities Site.
Paper bonds can also be converted to electronic form.
Bonds which have not matured, but were lost, stolen or destroyed, must have them reissued in electronic form.
See Series EE Savings Bonds for complete details.
EE Savings Bonds are not subject to state or local taxes, and all federal taxes can be deferred until redemption or the end of the extended maturity period.
Tax-Free Growth for Qualified Education Expenses
If EE Bonds issued after 1989 are redeemed for qualifying education expenses, the interest is completely tax free, provided certain conditions are met. According to IRS Publication 970, Tax Benefits for Education, the tax-free redemption requires the following conditions to be met:
- You pay qualified educational expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return.
- Your modified adjusted gross income (MAGI) is less than $92,200 ($145,750 if married filing jointly or qualifying widow(er)). You cannot exclude any of the interest if your modified adjusted gross income is equal to or more than the upper limit. The phaseout, if any, is figured for you when you fill out Form 8815. The MAGI thresholds are adjusted annually.
- Your filing status is not married filing separately.
- The bond must be issued either in your name (as the sole owner) or in the name of both you and your spouse (as co-owners).
- The owner of the Savings Bonds must be at least 24 years old before the bond's issue date. (The issue date is printed on the front of the Savings Bond.)
- The full proceeds of the savings bond redemption (both interest and principal) must be used for qualifying educational expenses.i
Note that redeeming EE Bonds to contribute to a 529 plan or a Coverdell education savings account is also considered a qualified educational expense. See Publication 970 (2010), Tax Benefits for Education for more details.
Redeeming EE savings bonds
EE Savings Bonds must be held for 12 months before they can be redeemed; an exception may apply if the bondholder is affected by a disaster such as a flood, fire, hurricane, or tornado. 
EE Bonds redeemed before five years will lose the last three months of interest.
EE Bonds earn interest for 30 years. After 30 years EE bonds stop earning interest and should be redeemed.
The bonds can be redeemed by following the instructions at TreasuryDirect: Redeeming (Cashing) EE and E Savings Bonds.
Role in a portfolio
An ideal use [in a portfolio] is to help you to defer taking Social Security. A rule of thumb is that each year you delay retirement and the onset of your Social Security payments will increase your benefits by 8%. If you buy a $10,000 savings bond each year starting at age 42, you assure yourself $20,000 in annual income beginning at age 62. That can help tide you over until you reach 70, when Social Security payments max out.
Gallery of EEbond images
One may find the images below useful when it comes to recognizing a paper EEbond. These images may prove helpful to beneficiaries in the task of locating a deceased person's assets.
- Treasury to End Over-the-Counter Sales of Paper U.S. Savings Bonds, TreasuryDirect, July 13, 2011, Viewed September 21, 2016.
- Purchase Limits, from TreasuryDirect.gov.
- IRS (29-Aug-2016). "Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989". https://www.irs.gov/uac/about-form-8815., Viewed 18-September 2016.
- Individual - Redeem or Replace Bonds in Areas Affected by Disaster, Treasury Direct, viewed 2 February 2014.
- Zweig, Jason (September 16, 2016). "Uncle Sam Pays Almost Twice the Yield on Treasurys — If You Know Where to Look". Wall Street Journal. http://blogs.wsj.com/moneybeat/2016/09/16/uncle-sam-pays-almost-twice-the-yield-on-treasurys-if-you-know-where-to-look/. Also see this Bogleheads® forum topic: .