Series 66: Education Savings Bond Program

Education Savings Bond Program

Under the education savings bond program, qualified taxpayers may not have to pay taxes on the interest earned on certain EE and I savings bonds if the money is used for qualified educational expenses in the same calendar year that the bonds are redeemed. Qualified educational expenses include tuition and mandatory fees at a college, university, vocational school, or other post-secondary institution.

EE and I savings bonds are offered in face values ranging from $25 to $10,000. Interest payments are accrued over the life of the bond and paid out with the principal at maturity. Savings bonds are not subject to state and local taxes, and federal taxes are deferred until redemption. Taxpayers who qualify for the educational savings bond program would not be required to pay federal taxes at redemption.

Constraints on the program include:

• • The money can be used for educational expenses for the bondholder, spouse, or child.
• • Purchasers of the bonds must be at least 24 years of age at the time the bond is issued.
• • The bonds are not available to high income taxpayers.
• • The EE and I bonds must have been issued after 1989.
• • The taxpayer must not be “married, but filing separately.”

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