Updated August 13, 2026. Quick answer: two dates decide what you keep, and neither is the date in the headlines. Your bond gets a new rate every six months from its own issue month, not on 1 May or 1 November — those are announcement dates. And redeeming before five years costs you the last three months of interest, so the month you choose decides which three months you give up. If the rate that just started is lower than the one before it, waiting until three months into it means you forfeit the cheap months instead of the expensive ones. Interest posts on the first of the month, so redeeming on the 20th gains nothing over the 2nd.
Your two dates, from your issue month
Find the month you bought in. The 12-month lock and the five-year mark both run from the first of that month, because that is what Treasury defines the issue date to be. The example years below are for a bond issued in 2022 — shift them to your own purchase year; the months do not move.
| Issued in | Your rate changes on | Can be cashed from | No penalty from |
|---|---|---|---|
| January | 1 January and 1 July | 1 January 2023 | 1 January 2027 |
| February | 1 February and 1 August | 1 February 2023 | 1 February 2027 |
| March | 1 March and 1 September | 1 March 2023 | 1 March 2027 |
| April | 1 April and 1 October | 1 April 2023 | 1 April 2027 |
| May | 1 May and 1 November | 1 May 2023 | 1 May 2027 |
| June | 1 June and 1 December | 1 June 2023 | 1 June 2027 |
| July | 1 January and 1 July | 1 July 2023 | 1 July 2027 |
| August | 1 February and 1 August | 1 August 2023 | 1 August 2027 |
| September | 1 March and 1 September | 1 September 2023 | 1 September 2027 |
| October | 1 April and 1 October | 1 October 2023 | 1 October 2027 |
| November | 1 May and 1 November | 1 November 2023 | 1 November 2027 |
| December | 1 June and 1 December | 1 December 2023 | 1 December 2027 |
Treasury states the rule plainly, and it is the single most misread fact about these bonds:
“Interest rate changes depend on when we issued the bond Although we announce the new rates in May and November, the date when the rate changes for your bond is every 6 months from the issue date of your bond. Use this table to understand when each new rate beg…” — www.treasurydirect.gov
The announcement schedule itself is regulatory — 31 CFR 359.9 sets the May and November publications — but an announcement is not a change to your bond. A May announcement reaches a bond issued in September only in September.
The three months you give up
“However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.” — www.treasurydirect.gov
The regulation behind it is 31 CFR 359.7, and the 12-month lock before any of this is 31 CFR 359.6. Notice what the penalty actually is: not a fee, and not a percentage. It is the three months immediately before you redeem. Those three months have a rate, and it is not always the same rate.
Which month to redeem in
Redeem early in the month, not late
Redemption value is computed at an accrual date, and Treasury defines that date for you:
“§ 359.39 How are redemption values calculated for definitive Series I savings bonds? We determine the redemption value of a definitive savings bonds for the accrual date (the first day of each month) by first determining the composite rate as defined…” — www.ecfr.gov
Interest is earned from the first day of the month you buy and compounds semiannually. Treasury’s own calculator exposes the same mechanic through a “Next Accrual” field, described as the first date after the one shown on which the bond increases in value. Holding from the 2nd to the 28th of a month buys you nothing.
The tax at the end
Redemption is when the federal tax lands, and there is no state or local tax on it at all:
“Must I pay tax on what the bond earns? Federal income tax: Yes State and local income tax: No Federal estate, gift, and excise taxes; state estate or inheritance taxes: Yes” — www.treasurydirect.gov
That exemption is statutory — 31 U.S.C. 3124(a) — and Treasury’s own regulation cites it directly. The same statute is what makes a Treasury bill beat a CD at the same headline yield for anyone in a taxing state; our after-tax calculator puts a number on it.
What we could not establish, and are not going to invent
One thing on this page is reasoning from primary sources rather than a quotation, and it should be labelled as such:
- A Treasury sentence saying “there is no benefit to waiting until later in the month to cash a bond”. Treasury does not publish that sentence. It follows from two regulations it does publish — the accrual date is the first of the month (31 CFR 359.39) and the issue date is the first of the month (31 CFR 359.49) — and we have shown the reasoning rather than pretending it is a quote.
Related: the purchase limit and the gift box · why savings bonds cannot go to a broker.
Sources
Every rule on this page is read from TreasuryDirect or from 31 CFR part 359 on August 13, 2026. No rate history is asserted.
| What it establishes | Read at |
|---|---|
| Treasury’s plain-language I bond page states you can redeem an I bond after 12 months. | www.treasurydirect.gov |
| 31 CFR 359.6 is the regulatory cite for the 12-month minimum hold (for bonds issued Feb 1, 2003 or later; a 6-month rule applied to older bonds). | www.ecfr.gov |
| Treasury’s verbatim wording of the 3-month interest penalty for redeeming before 5 years, with a worked example. | www.treasurydirect.gov |
| 31 CFR 359.7 is the regulatory cite for the 3-month interest penalty, including a worked example and the floor at par value. | www.ecfr.gov |
| I bonds earn interest starting from the first day of the month in which they are bought (not the actual purchase date). | www.treasurydirect.gov |
| For book-entry Series I bonds, the regulatory ‘issue date’ is defined as the first day of the month in which the security posts to the account — reinforcing that I bond value/interest tracks calendar months, not exact days. | www.ecfr.gov |
| Treasury computes redemption value as of an ‘accrual date’ that is defined as the first day of each month — meaning a bond’s redemption value does not increase mid-month. | www.ecfr.gov |
| The Savings Bond Calculator instructions page describes a ‘Next Accrual’ date field as ‘the first date after the [current] date… that each bond increases in value’ — i.e., Treasury’s own tool documentation confirms a bond’s value is flat within a given month and only steps up on its next monthly accrual date. | www.treasurydirect.gov |
| Treasury explains that although new rates are announced every May 1 and November 1, the date a given bond’s OWN rate changes depends on its issue month (6 months after issue, recurring) — and publishes a full table mapping issue month to the two annual rate-change dates for that bond. | www.treasurydirect.gov |
| 31 CFR 359.9 is the regulatory basis for the May 1 / November 1 announcement schedule, and clarifies the effective date of a new rate remains the first day of the announcement month even if the announcement itself slips to the next business day. | www.ecfr.gov |
| I bond interest compounds semiannually: every 6 months, Treasury applies the current rate to a new principal that already includes the prior 6 months’ interest. | www.treasurydirect.gov |
| Treasury’s plain-language page states I bond interest is subject to federal income tax but exempt from state and local income tax. | www.treasurydirect.gov |
| The federal statutory basis for the state/local tax exemption is 31 U.S.C. 3124(a), which exempts U.S. government obligations from state/local taxation except nondiscriminatory franchise taxes and estate/inheritance taxes — matching the ‘Yes’ on estate/inheritance tax in b13. | uscode.house.gov |
| Treasury’s own Series I savings bond regulation (Appendix to 31 CFR part 359) directly cites 31 U.S.C. 3124 as the basis for the state/local tax exemption, closing the loop between Treasury’s plain-language claim and the statute. | www.ecfr.gov |
This page computes dates, not values. It does not know your bond’s rate history and does not estimate what it is worth — use Treasury’s own savings bond calculator for a value. General information, not tax or financial advice; rates and rules are year-labelled and change.
More savings bond decision guides, each sourced directly from the agency’s own publications: Matured HH Bonds.