When to Cash an I Bond: the Month Decides What You Keep

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.

More IRS forms and schedules, read line by line: Form 8815 instructions.

Price a bond by its issue month: I bond calculator.

The November 1 rate announcement: the November 2026 I bond rate, due November 1.

The Treasury form for cashing a paper savings bond, with the cash-or-hold decision first: FS Form 1522 and the cash-or-hold decision.

The current rate and the fixed-rate history: the current I bond rate and its fixed-rate history.

The May 2027 announcement: the May 2027 I bond rate, due May 1, 2027.

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.

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.

Figures verified against TreasuryDirect (I bond pages), 31 CFR part 359 (eCFR sections 359.6, 359.7, 359.9, 359.39 and 359.49) and 31 U.S.C. 3124 on September 30, 2026; the Savings Bond Calculator instructions description was not re-checked.

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.

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.