United States savings bond


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Related to United States savings bond: E Bonds

Savings Bond

In the United States, a non-tradable bond issued by the federal government for savings purposes. A savings bond allows citizens to receive a guaranteed return for their investments and helps raise revenue for the government. There are two types of savings bond in the United States: Series EE and Series I, with the main difference being that Series I bonds have interest rates indexed to inflation. Savings bonds pay coupons semi-annually; they are sold at face value and pay par upon maturity, which is 30 years after purchase. Bonds not held for at least five years are subject to a redemption penalty. Federal taxes on interest are deferred until redemption or maturity. Savings bonds are non-transferable and must be either held or redeemed.

United States savings bond

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In 2003, the Treasury Department extended the minimum holding period applicable to United States savings bonds from 6 to 12 months, effective with issues dated on and after February 1, 2003.
Subject to certain limitations and phaseout rules, interest on qualified United States savings bonds may be excluded from gross income to the extent that the proceeds are used to pay qualified higher education expenses during the taxable year in which the redemption occurs.
Qualified United States savings bonds are any United States savings bonds issued (i) after 1989, (ii) to an individual who has attained age 24 before the date of issuance.

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