A Patriot Bond is a paper Series EE savings bond that the U.S. Treasury issued between December 2001 and December 2011 as a way for Americans to express support for the nation’s anti-terrorism efforts. Despite the special name printed on the bond, a Patriot Bond is identical to any other Series EE savings bond in every financial respect. It earns the same interest, follows the same rules, and is redeemed the same way. The designation was purely symbolic.
How Patriot Bonds Work
Because Patriot Bonds are Series EE bonds, they earn interest monthly and compound semiannually. Every six months, the Treasury applies the bond’s interest rate to a new principal that includes the prior balance plus the interest earned during the previous six-month period. This compounding cycle continues for up to 30 years, at which point the bond stops earning interest entirely and should be cashed.
EE bonds purchased from the Treasury today carry a guarantee that they will double in value within 20 years, with the Treasury adding money at the 20-year mark if needed. Patriot Bonds purchased during their issuance window may have different rate structures depending on when they were bought, since the Treasury changed how it set EE bond rates several times over the years. Regardless of the rate, interest on all EE bonds, including Patriot Bonds, is exempt from state and local income tax. You will owe federal income tax on the interest, but only when you choose to report it.
What Your Patriot Bond Is Worth Today
The simplest way to find out is to use the Savings Bond Calculator on TreasuryDirect.gov. You’ll need the bond’s series (EE), its denomination, its serial number, and its issue date, all of which are printed on the face of the bond. The calculator will show you the current value, the interest earned so far, and the next date interest will be added.
Since the last Patriot Bonds were issued in December 2011, every one still outstanding has been held for well over a decade. Many of the earliest ones, issued in late 2001, have already passed their 20-year mark. If you’re holding Patriot Bonds from that era, they may have already received the Treasury’s one-time adjustment to ensure doubling. All Patriot Bonds will stop earning interest 30 years after their issue date, so the first wave will mature around 2031.
How to Cash a Patriot Bond
You can redeem a Patriot Bond any time after you’ve owned it for at least one year, but cashing it before five years triggers a penalty: you lose the last three months of interest. After five years, there’s no penalty.
You have two options for redeeming a paper Patriot Bond:
- At your bank: Many banks will cash savings bonds for their account holders. Call ahead to ask whether they offer this service, how much they’ll redeem at one time, and what identification you’ll need to bring.
- Through the Treasury: Download and fill out FS Form 1522 from TreasuryDirect.gov. If the total value of the bonds you’re cashing exceeds $1,000, you must have your signature certified (the form explains how). Mail the completed form along with the physical bonds to the address listed on the form.
You cannot cash a paper bond for a partial amount. Each bond must be redeemed for its full value in a single transaction.
Tax Rules for the Interest
Interest earned on a Patriot Bond is subject to federal income tax but exempt from state and local income tax. You get to choose when you report the interest to the IRS.
Most people defer reporting until they actually receive the money, either by cashing the bond or when it stops earning interest at maturity. When that happens, you’ll receive a Form 1099-INT showing the total interest the bond earned over its lifetime. You report that amount on your federal return for that year.
Alternatively, you can report the interest each year as it accrues, even though you haven’t received the cash yet. If you choose this route, you won’t get a 1099-INT annually. You’ll only receive one at the end, and it will show the bond’s entire interest history. You’ll then need to follow the instructions in IRS Publication 550 to show the IRS that you already reported some or all of that interest in prior years.
Switching between these two methods is possible but comes with rules. If you’ve been deferring and want to start reporting annually, you can do so without IRS permission, but you must apply the change to all savings bonds tied to that Social Security number, and you must report all previously unreported interest in the year you switch. Going the other direction, from annual reporting to deferring, requires filing IRS Form 3115.
Why They Were Discontinued
The Treasury retired the Patriot Bond designation in December 2011, the same time it stopped selling all paper savings bonds over the counter at banks and financial institutions. Since then, new EE bonds have been available only in electronic form through TreasuryDirect. If you still hold paper Patriot Bonds, they remain fully valid and continue earning interest on their original schedule until they reach their 30-year maturity date.