Starting in 2025, Americans will no longer be able to use their tax refunds to purchase paper I Bonds, a popular government-backed investment that protects against inflation.
Since 2012, when banks stopped selling paper savings bonds, buyers have been limited to making their purchases electronically, with one exception: buyers could purchase paper series I savings bonds with their IRS tax refund each year.
Such bonds are known to be given as gifts, or used cleverly as a way for buyers to purchase as much as $5,000 more in I bonds, beyond the allowed annual limit of $10,000 a person in digital bonds.
However, as of January 1, that option is no longer be available, a change that was quietly announced, under the Biden administration, through a TreasuryDirect website update last year.
Now, all savings bonds are digital and must be bought online using the department’s TreasuryDirect system. In addition, the extra $5,000 option has ended.
‘You may continue to purchase up to $10,000 of series I bonds in a calendar year,’ the system’s website says.
The Tax Time Savings Bonds program was launched in 2010 to give tax filers the ability to buy paper I-bonds using their tax refunds.
Starting in 2025, Americans will no longer be able to use their tax refunds to purchase paper I Bonds, a popular government-backed investment that protects against inflation.
However, on average, only 35,000 people used this program to buy paper bonds each year, just 0.03 percent of all tax filers, and less than 10 percent of I-bond purchasers, according to the Internal Revenue Service.
The IRS claimed that running the program is costly and mailing paper bonds leaves them open to fraud, theft, loss and delays, leading to its decision to terminate the decade-old program.
‘Mailing paper bonds risked fraud, theft, loss and delays,’ the site says, adding that buying savings bonds online is ‘simple, safe and affordable.’
David Enna, founder of Tipswatch.com, a website that tracks securities that protect against inflation, said some tax filers are likely to be disappointed.
The paper purchase was a popular strategy used to overpay taxes during a tax year to generate a tax refund to buy the bonds the next spring, Enna told the New York Times.
‘The loss of the option to buy an extra $5,000 in I bonds will probably be unpopular among buyers,’ Enna said.
Those who have paper bonds have a few options when looking to cash in the savings.Â
‘The loss of the option to buy an extra $5,000 in I bonds will probably be unpopular among buyers,’ David Enna, founder of Tipswatch.com told the New York Times
The IRS claimed that running the program is costly and mailing paper bonds leaves them open to fraud, theft, loss and delays, leading to its decision to terminate the decade-old program
One option is to find a bank that still cashes the paper bonds or mail them into the Treasury Department. Another option is to convert them to electric bonds using an online TreasuryDirect account.
However, the TreasuryDirect website can be hard to navigate, Kiplinger.com reported.
Going forward, ‘the program allowing for your refund to be deposited into your Treasury Direct account to buy savings bonds, as well as the ability to buy paper bonds with your refund, has been discontinued,’ the website reads.
In order to buy bonds now, you must go to TreasuryDirect.gov, where you can buy up to $10,000 in electronic I-bonds each year.
