Retirement & Financial Planning Report

According to published reports, more than $16 billion of U.S. savings bonds have matured. All Series H bonds, many Series E bonds, some Series EE bonds, and some Series HH bonds no longer pay any interest to bondholders. By this July, all Series E bonds will have stopped paying interest.

If you have any of these old savings bonds tucked away in a desk drawer, you might as well cash them in. Yes, you’ll owe income tax on the earnings but you’ll still put cash into your pocket.

Say you redeem a bond for $1,000. The original cost might have been $250. In this hypothetical example, you’d owe tax on $750 of earnings. In a 28 percent tax bracket you’d owe $210 in tax and walk away with $790 to spend or invest. As is the case with all Treasury issues, you’ll owe no state or local income tax on earnings from savings bonds.