Declaring Interest on i-Series Savings Bonds

Hi Folks -

Quite a while ago, I read a post from @WendyBG over on the METAR board, if I understand correctly, that she recommended a strategy for declaring accrued interest income each year for an I-Series Savings Bond on your annual tax return instead of when the interest is actually paid.

I don’t receive any end of year statements from the Treasury but do check the account periodically, and have no clue where to get end-of-year interest accrued nor do I know how to report this income without the requisite 1099.

Does anyone here do this and how is it done? I am actually unclear of the benefits, except that declaring the interest income as it is accrued to the Bond value instead of declaring it all at the end which might have other ramifications in terms of minimizing / controlling income with RMD’s and other ramifications.

Any help would be appreciated!!!

@38Packard, I think that the Savings Bond program was invented for small savers who held onto their bonds until maturity. The minimum purchase is $25 which tells us whom the program is aimed at.

When I bought my first I-Bonds in 2001, the maximum purchase was $30,000 per entity. The yield was 3% over inflation. These bonds mature in September 2031.

The program wasn’t well-known. I was able to speak with a representative at Treasury who told me that I could buy up to the maximum in my own name and also in my Revocable Living Trust. Treasury has since reduced the maximum to $10,000 per entity per year.

Treasury sent me the paper bonds, which I keep in my safe deposit box. At no time did they ever send 1099-INTs or any valuation. I kept spreadsheets which I updated monthly. I tracked the monthly and total interest income for over 20 years until the present and will continue until the bonds mature.

It wasn’t until last year that @aj485 told me that all the interest would be paid when the bonds mature. (I had erroneously planned to hold onto them and gradually pay out the interest after 2031.) The rule also says that once the interest is reported for taxation it must be reported every year subsequently.

When I realized that the amount of interest would boost us into a high tax bracket if I waited until 2031 I realized that I had better start paying taxes now. (I will need to begin MRDs from my Traditional IRA in 3 years.)

I get the value and interest for the paper bonds at:

The value and interest for electronic bonds are at:

I report the Savings Bond interest in the box that says “Savings Bond Interest.” There is also a box to check that says “Interest without a 1099-INT.”

I will be very careful to attach a new spreadsheet showing the annual interest and tax payments to my Form 1040 every year. I know that Treasury will issue a 1099-INT showing all the interest disbursed in September 2031, which will be well into six figures. Then I will have to prove to the IRS that I have indeed paid tax on all this interest from 2020 - 2031.



Thanks for the history, the current info and the links @WendyBG !! We also intend to keep these bonds for a long time, but I’m not sure if I should consider this option. I can see how it would be helpful for the right amount of interest income, but it may be overkill for our situation.

I’m going to do some modeling to see if as we invest ($10,000 * 2) more each year, would it make sense to do this.

Thanks again,

Don’t forget that under current law, the tax brackets will revert back to their previous, mostly higher, rates in 2026. If the current rates are not extended, it might be worthwhile to start the process of annual reporting of saving bond interest in 2025, so all of the interest accrued to that point is taxed at the lower rates.



Isn’t the interest tax free because it’s a government obligation?

@FlyingCircus, Treasury debt (including Savings Bonds) is exempt from state and local taxes but subject to federal income tax.

Some municipal bonds are triple tax free but not Treasury debt.


We have some of these bonds as well. If you sell a bond that you have not been paying taxes on, does it trigger the need to then report and pay taxes on the interest for all the bonds you keep? Or can I sell my bonds over time and only be assessed for the interest earned on those redeemed?


You only pay taxes on the bonds you redeem (or which you hold to maturity). In the past, I redeemed a few paper savings bonds and I only paid taxes on the interest from those specific bonds.