You can defer Federal income tax until you redeem the bonds or they stop earning interest after 30 years. This means you can plan ahead and choose when might be the best time to realize income for tax purposes. And, since your interest isn't taxed until you redeem a bond, your savings grow faster because interest compounds on the full value of the bond before taxes. Lower and middle- income investors may be eligible for special tax benefits. If you can qualify, you can exclude all or part of the interest earned on Series EE from income when you cash the bonds to pay for post-secondary tuition and fees.
Savings bonds can be an excellent way to help build savings for retirement.
The combination of a thirty-year interest earning life and the other features of bonds make them attractive to many investors. Bonds increase in value every month. There is a 3-month interest penalty if you redeem your bonds before five years. Find out more about the features that appeal to you by contacting the University Payroll Services office at 845-2711. We want you to know how Series EE bonds works so you can decide how bonds can fit into your plans.