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Series EE Bond Education Exclusion — Cash Old Savings Bonds Tax-Free for Tuition

Difficulty Medium Risk Low Applies To All (federal rule) Potential Savings Avoids federal income tax on some or all bond interest used for education Last Verified 2026-04-03

Series EE Bond Education Exclusion — Cash Old Savings Bonds Tax-Free for Tuition

What Is It?

If you cash in certain Series EE bonds issued after 1989, or certain Series I bonds, you may be able to exclude some or all of the interest from federal income when the proceeds are used for qualified education costs.

This is a classic sleeper rule because many people assume savings bond interest is always taxable when redeemed. In the right case, it is not.

How It Works

To use the exclusion, you generally must satisfy several conditions, including:

  • the bonds must be qualifying EE or I bonds
  • the bond owner must meet the age rule at issuance
  • the proceeds must be used for qualified education expenses
  • your filing status cannot be married filing separately
  • your MAGI must be within the phaseout limits for the year

Qualified education expenses generally include tuition and required fees at an eligible educational institution, and may also include certain contributions to a 529 plan or Coverdell ESA.

Who Benefits Most?

Families holding long-matured savings bonds and facing tuition bills or related higher-education funding needs.

  • Education Savings Bond Program
  • IRS Publication 970

What Most People Don’t Know

  • This is about the interest, not the principal. The principal is already yours; the benefit is excluding the interest from income.
  • Not every savings bond qualifies. The issue date and bond type matter.
  • Income limits matter. High-income households can lose the exclusion.
  • You can sometimes coordinate it with education planning. In some cases, using the proceeds to fund a 529 or Coverdell ESA can preserve the benefit.

Frequently Asked Questions

Do all savings bonds qualify?

No. IRS Publication 970 says the rule generally covers qualifying Series EE bonds issued after 1989 and qualifying Series I bonds.

Can I use the exclusion if I am married filing separately?

No. The exclusion is not available with married filing separately status.

What kinds of education costs count?

Qualified education expenses generally include tuition and required fees at an eligible educational institution, with certain coordination rules explained in Publication 970.

Sources