Where can Savings Bonds be redeemed?
Savings Bonds can be redeemed at most financial institutions. 15. How are Savings Bonds taxed? Savings Bond interest is exempt from state and local income tax. Savings Bond interest is subject to federal income tax; however, taxation can be deferred until redemption, final maturity, or other taxable disposition, whichever occurs first. You also have the option of claiming interest annually for federal income tax purposes. Savings Bonds are not exempt from any applicable estate, inheritance, gift or other excise taxes, whether federal or state. Tax benefits also may be available when redemption amounts are used to pay education expenses. 16. What tax benefits may be available if Savings Bond redemption amounts are used to pay education expenses? Qualified taxpayers may be able to exclude all or part of the interest earned from eligible Savings Bonds issued after 1989 when paying qualified higher education expenses. Savings Bonds must be issued in the name of a taxpayer age 24 or older a
