The Benefits of I Bonds vs EE Bonds To Store Your Savings

All of the information you'll need to choose between Series I and EE savings bonds.

Paper bonds fanned out like cash. Alternating between I and EE bonds.
(Image credit: Getty Images)

Series I bonds and EE bonds are popular U.S. savings bonds that offer a safe way to save. Choosing between the two can be difficult. The best place to start is to gain an understanding of the terms of each bond and then compare the benefits and drawbacks of each. 

Both bonds are solid investments that have minimal risk and virtually guarantee a return. You can’t go wrong in this situation. You can only do better.

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I Bonds vs EE Bonds
Header Cell - Column 0 I Bonds- ElectronicI Bonds- PaperEE-Bonds
How to buyFrom onlyCan only be purchased using your income tax refund. Use Form 8888From only
Interest rateTwo rates - a fixed rate and a variable rateSameRate when purchased is locked in for 20 years, It may be adjusted after 20 years
Row 2 - Cell 0 The fixed rate is set on the date you buy the bond and remains the same for the entire term. The variable rate is adjusted for inflation twice a yearSameN/A
Earns interestEarned semi-yearly and added to the principalSameSame
Minimum per transactionElectronic I-bonds: $25 minimum or any amount above that to the pennyPaper I-bonds: $50Same
Maximum purchase, per social security number$10,000 per year of electronic bonds$5,000 of paper bonds. Paper bonds can only be bought using a refund from your tax return$10,000 per year of electronic bonds. These are not sold as paper bonds
Liquidity/Marketability Can never be sold on the open market — only redeemed. Can’t be redeemed for the first year, and there’s a penalty (loss of last three months' worth of interest) for redeeming within the first five yearsSameSame
Tax treatmentSubject to federal income tax? Yes Subject to state and local income tax? NoSameSame
Exclusion from federal income taxYou may not have to pay tax on the earnings if you use the money for qualified higher education expenses and you don't exceed the income limitsSameSame
How to redeemAccess your TreasuryDirect account, go to ManageDirect and use the link for cashing in securitiesAt the bank where you have an account or by mail. Fill it out and remit FS Form 1522. If the value of the bond(s) you are cashing is more than $1,000, you must have your signature certified. Send the form and the bonds to the address printed on the FormAccess your TreasuryDirect account, go to ManageDirect and use the link for cashing in securities

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Donna LeValley
Personal Finance Writer

Donna joined Kiplinger as a personal finance writer in 2023. She spent more than a decade as the contributing editor of J.K.Lasser's Your Income Tax Guide and edited state specific legal treatises at ALM Media. She has shared her expertise as a guest on Bloomberg, CNN, Fox, NPR, CNBC and many other media outlets around the nation.